B. Smith of Wealth and Wisdom, recently put a lot of thought into a touchy topic: what to do if your family asks for money.
His article leads with a common misconception about entrepreneurs: family members think that just because we are in business for ourselves we must be loaded. He writes:
“For entrepreneurs it can be even worse. People assume that just because you own the company that you are rich and that they are entitled. You can easily become their personal bank … or their welfare system.”
Smith shares 7 tips for how to handle this delicate situation when you are asked for money, all of them good ones. His point number 3 really hit struck a nerve with me: “Separate emotion from fact.”
The same principle could apply to family members who ask for jobs from entrepreneurs.
When I worked on the franchise side of Pearle Vision I encountered situations where owners hired family members to work in their stores. It was with a sense of duty that my franchisees would take on family members — giving them a job and in too many cases beginning the downward slide of their profitability.
It was difficult — almost impossible — to separate the emotion of being related to the fact that perhaps they weren’t the best employee for the business. In one horrific experience two members of the same family went into business together — 50/50. When the situation went south, the ugly battles began.
Smith’s tips for dealing with this highly charged situation of family and money resonate when it comes to family members in your business. As difficult as it sounds — you have to separate the emotion from the fact and truly assess what is best for your business.
In the case of going into business together with a family member: make sure someone owns 51%. You!