Ask HN: Starting a business with family, how do I protect our relationship? | Hacker News Reader

Ask HN: Starting a business with family, how do I protect our relationship?

3 pointsMStrick3 comments

My wife and I are starting a franchise business with my brother-in-law and his wife. Our relationship is awesome, and we get along great. While we are all excited about the business, we are concerned about the risks that money can introduce to a relationship. The biggest risk being we don't want anyone to harbor resentment toward someone else for varying levels of effort towards the business. Currently we are both equal share partners and the initiation of the business.

We discussed various solutions to this. One was to track hourly contributions towards the business, and divvy up the proceeds based off level of effort at the end of the fiscal year. The challenge with this approach is that some contributions are more significant than others. You could argue that developing a social media campaign over two hours would be significantly more valuable than cleaning the shop over four hours as an example. Therefore if we were to go this path, we would need to assign some weighting to each activity and it seems to get overly complex very quickly.

Another was to create a RACI chart, mapping out all the core functions of the business, and indicating who would be responsible, and accountable for each major action. The RACI chart would not dictate an allocation of money based on the level of effort, but would aim to hold those accountable for equal contributions to the business.

Neither one of these ideas seem great to me, and so I'm curious what other thoughts people have. The two examples above our mechanisms to comanage the business, our intent is to develop the most appropriate mechanism and codify it in an operating agreement that would be binding.

Thanks

As smt88 says in the comments: > You can't. If you value the relationship, don't do this.

While I agree that there is never a water-tight way to protect personal relationships, it is possible to retain them in a business scenario. But I would advise against it.

I have for many years now had a company with my best friend. We lived together for a long time, and let me tell you — you start to lose the quirks and the 'niceties' of an established personal relationship very very fast unless you are able to separate work and life, and create boundaries to do so. It seems like you and your wife currently have a separate home life from your other business partners, so this is a good step.

One of the reasons why my and my friend's company works so well is that we have a strict 50/50 split on equity and pay. This means sometimes one contributes more than the other. Yes, this can create feelings of resentment — and unless you are 100% open about your feelings with each other, and are close enough to remedy it, these feelings can harbor and grow and ultimately ruin the relationship. Business (especially when starting one) is unpredictable. That is an understatement. I would argue that splitting equity differently than equally has more potential to go wrong because roles are often redefined on the fly and you cannot foresee with certainty how much work each person will have on their plate.

I feel like my 'success' at doing at what you are hoping to achieve is an outlier. Indeed, we have also both worked with other family members and this has somewhat soured relations. Very rarely does business make a pre-existing personal relationship stronger. It adds more potential points of contention. Things never go swimmingly; and the best you can hope for is a solid outcome with bumps along the way. You must ask yourself if you are capable of handling these bumps as a group.

You must also ask yourself if you are willing to lose your relationship (as it is). This is a very real risk, and has happened to people I know (myself included).

I wish you the best, but also cannot strain enough how important it is to value personal relationships.

Set all your expectations up front and explicitly as possible. That can be more awkward with family than colleagues but it's also more important. Resentment occurs when someone thinks they're doing more or getting less than they bargained for.

You can't. If you value the relationship, don't do this.

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