Start-Ups and Keeping it in the Family

Start-Ups and Keeping it in the Family

Many small businesses and start-ups begin within a family circle. It often makes sense to include your nearest and dearest when bringing your passionate start-up ideas to life. You know each other well and who better to have on your team than someone who loves you and has always got your back?

In Stages of Growth in a Family Business, the South African SME Toolkit website gives an excellent, in-depth outline on the most common stages of family growth within a new business, namely:

1)      The Founder / Controlling owner – where one person is running the business.

2)      The Sibling Partnership – a more complex and democratic system takes shape.

3)      The Cousin Consideration – widening the business to include extended family.

Start-Ups and Keeping it in the FamilyIt’s good to have these potential stages of growth clear in your mind before you activate your start-up, so you’re aware of the extended partnership a family business may become. From the onset it would be best to have a clear idea of how inclusive you want to be with your business. This will mean your vision for growth is relatively clear and you can manage family expectations along the way. Also, having clearly defined systems in place will distinguish between business and family matters. Just a note here in terms of priorities too: A broken business is easier to fix than a broken family relationship.  

We’ve put together some pointers to assist you in going into a start-up business with family.  Hopefully these will help keep relations on a relatively happy footing.

Define Roles and Responsibilities: Initially, if it’s your business, you may naturally be the leader and decision maker.  But as your start-up grows your family partner will have additional roles to play and responsibilities to bear. At this stage, clarify their role by defining them as a leader and give them a title that shows they are a key decision maker. Having a partnership agreement in place as soon as possible is also a great tool to guide your relationship and the business into the future.

Start-Ups and Keeping it in the FamilyBe Transparent About Money: This can be very tricky, but people working closely together will invariably find out what you are earning and billing, even if you don’t tell them. So it pays to be transparent about money from the onset, and honest about recognising the value of family members within the business. As soon as you’re at a level that warrants it, employ an external bookkeeper or accountant who can field money queries if necessary.

Be Honest About Strengths and Weaknesses:  Another difficult one! You think you have a great creative eye while your sister believes she’s an excellent marketer, but six months into the business you may both need to reassess your skills.  It will help here to have someone outside the family to step in and do a small business assessment to guide you along the way.

Flag Commitments Ahead of Time: There’s nothing worse than having a deadline plus a sibling who has a family commitment and can’t deliver on expectations. You’re caught in the middle because you know what the business requires and what the family commitment involves. You’ll need to be careful about scheduling processes from the onset of the partnership, but disappointments will happen. It’s dealing with these situations fairly and learning from them that will guide your business from strength to strength.

Start-Ups and Keeping it in the FamilySchedule Reviews: In keeping with the information in the Stages of Growth article, schedule official reviews with each other every six months to decide what the business plan for the next six months will be. Minute the meetings, refer back to the last meeting’s notes – are expectations being met on both sides and is it time for change?

Have Down-Time: It’s tempting to talk work when you’re at home socialising with the family but it works wonders to actually have a system whereby you don’t discuss work in certain environments. You need to just be family with each other too and by banning work-speak outside the office you allow each other space to talk about other things.

Lastly, if you live by the ethics code of Lorii Myers, you can’t go wrong:

“Treat your colleagues, family, and friends with respect, dignity, fairness, and courtesy.”

For any business solutions advice or assistance please contact Nokwazi on


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