Starting a family business is a time-honored tradition and a sense of pride for many families. However, it can also be a nightmare. Whether your business is the latest Asian-fusion restaurant or a construction company, hiring the services of a business law firm such as Spector & Ehrenworth, P.C., can help keep your family relationships intact and your business running smoothly. Here are seven pitfalls that a business lawyer can help you avoid if you plan to go into business with your family.
1. Ownership Problems
Things such as going into business with someone who is married may have legal ramifications on the business. What happens if that person gets a divorce? How much is their spouse entitled to?
2. Having No Exit Strategy
The time to plan for an exit strategy is when you start. You must plan for anticipated retirement and the long-term fate of the business.
3. Not Hiring Non-Family Members
Sometimes, there is no one in the family who has the necessary skill set. You may want to keep everything in the family, but it is always best to have someone on the team who knows the business inside and out.
4. Not Having Clearly Defined Roles
Families are dynamic, and it is often expected that everyone will do whatever is needed for the business. Having clearly defined roles can help avoid misunderstandings.
5. Co-signing Loans and Lending Money
These agreements are often entered in the best faith, but sometimes things go wrong. Money lending in families can tear them apart.
6. Sharing Power
Sharing power is asking for trouble, particularly when you consider the power dynamics in families that occur when the younger generation is now in charge.
7. Mixing Family and Business Relationships
This is perhaps the most difficult pitfall to avoid. It is also the reason why many family businesses breakup, taking family relationships with it.
Spector & Ehrenworth, P.C. can help you navigate the waters of starting a family business and help you balance professional and personal relationships. To schedule an appointment to speak with a business attorney, call (973) 845-6525 or e-mail info@selawfirm.com.
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