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April 2, 2020

Managing Family and Friends in Your Small Business

Alice Gledhill

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©© GettyImages/andresr

"Families are like fudge – mostly sweet, with a few nuts."

Les Dawson, British comedian (1931-1993)

My family was feeling very optimistic about 2020, with aspirations to expand my stepmom's business by opening a shop on the main street. My parents had a strong network to support them, and spent a long time preparing to ensure they could make the shop work.

But no one could have predicted the impact that COVID-19 would have.

The futures of countless small businesses, including my own family's, are now uncertain. But, in a time when people are especially concerned about loved ones, and dependent on their local communities, the lessons we learned before the outbreak resonate now more than ever.

After all, with or without the threat of a global health crisis, relying on friends and family for the success of your business certainly carries its own risks. What if there's a falling out? How will you hire beyond the family? Will your products even sell? All these fears are rational but can stand in the way of success if not properly managed.

A Sweet Dream Come True

December was a busy time for my family – as I'm sure it was for most – but last year particularly so as we were frantically ordering floor tiles and light fixtures, hauling in huge ovens and industrial sinks, and stripping the walls of a former optometrist clinic. We were opening my stepmom's first fudge shop. Hurrah!

We enrolled our friends to help, too. For a week, the tiny store was packed with people giving up their time to make the dream a reality. Chris tackled the electrics in the kitchen, Bryon cut the countertops to size, and Tracy gave the walls a much-needed coat of paint. It was humbling for my parents to see just how much their friends and relatives wanted the shop to succeed. No task was too much trouble for anyone.

After some long days and even longer nights, the shop was open just in time for Christmas. The counter was stocked with rich brownies, crumbly tablet, and a wide array of enticing fudge flavors. The smell of sweet, sugary success filled the shop, and customers soon flocked in to get a taste!

And, after three months, the shop was still doing well. To our delight, my stepmom already had regular customers looking for a sweet treat every lunchtime, and few local businesses had even made bulk orders. The brand was quickly becoming well-established in the town, thanks to everyone's voluntary hard work and dedication.

My stepmom loved being in the shop because it "didn't feel like work."

A Family Business is Not All Fun and Games

This was very much the same feeling for Mind Tools editor Tom Mugridge and his wife Lynette, who owned and managed a costume store for 11 successful years. They employed friends and friends-of-friends, as well as their own daughter, so the atmosphere was very relaxed – especially with staff borrowing wigs and costumes each week!

But Tom admits that it was a challenge to maintain professionalism. The line between having a hobby and running a business sometimes became blurred. Borrowed stock might come back in an unsellable condition, or wouldn't come back at all. And the pair worried that their daughter's part-time role in the shop, although a great "foot in the door," set unrealistic expectations for her future jobs. After all, not many bosses encourage you to wear a bright green frog suit at work!

Unfortunately, the business did not survive the dual blows of the 2008 global recession and the rise of online shopping.

Tom says, "Amazon was offering the same products as us but at a lower cost than our suppliers were selling them for. We just couldn't compete."

So what advice does Tom give to small business owners?

He says, "Have a plan. Do a Risk Analysis if you want the business to have a future, and set SMART goals. Don't just make it up as you go along."

While you can't eliminate every danger, prioritizing risks can help you focus on the most important and most likely eventualities, and contingency planning can keep your business afloat after an unexpected event.

Tom goes on to say that, "Having boundaries is the most important thing. It was very emotional when we had to let people go. You have to have clear boundaries between friendships and professional working relationships."

Avoiding a Sticky Situation

I fear that this is also where my parents could struggle, if they're brave enough to try again after lock-down.

At Mind Tools, we are aware of the huge personal, professional, and financial impact that COVID-19 has had on our learners. That's why we've created a support pack of free content, aimed at maintaining your physical and emotional well-being during this difficult time.

My stepmom relied on a friend and my dad to run the shop when she couldn't be there herself. But running your own business can take a toll on relationships – particularly if you manage your family members or friends.

I worry that my siblings could begin to resent the business if it takes their mom's time away from them. It may become difficult for her to "switch off" since work plays such a large role in family life.

Running a Small Business Is a Big Workout

Zoe Cornish, chief operating officer of Emerald Works has experienced this with her partner, Tim, who owns a gym within the CrossFit brand.

Tim's success is largely down to having a strong personal brand, but it can be difficult to separate the person from the business.

Zoe says, "I think it's more of a lifestyle than a business. It isn't nine-to-five."

"It's amazing how many people assume that Tim is always available; he'll get texts really late at night. He's never really off duty. Even on our honeymoon he was still running the business!"

And although Tim has had to close the gym because of the coronavirus outbreak, he is still working hard by creating home workout tutorials that his customers can watch and follow online.

But as a business owner, it is particularly important to take breaks from work to avoid burnout.

However, having such a close-knit community within your business can also make a world of difference when you need an extra pair of hands… or 10.

Tim discovered this when he moved his gym to a new, larger location. A number of his loyal customers kindly volunteered to lend their skills: redecorating, fitting electrics, even creating new signs.

Zoe says, "It was wonderful that these people were so willing to offer their time and energy without expecting anything in return."

The help he received was evidently a weight off Tim's shoulders, and was only possible because Tim has such a strong relationship with his customers.

Keep Your Friends Close... But Not Too Close

However, there are dangers in having such tight bonds with family or friends in a business setting.

For example, you might struggle to invent ways to improve if you fall into groupthink.

On the other hand, some business owners can be unwilling to take on ideas and feedback – even from friends and family. After all, when you've given your heart and soul to a product or brand, every criticism becomes personal.

Giving too many friendly discounts could damage profits. Or, in a worst-case scenario, disagreements could be catastrophic for the business.

And what will you do if a member of your family suddenly falls ill and can't work?

I think that the most likely risk of hiring friends and family is that the group work ethic might be too relaxed. I know that I would spend more time eating my stepmom's delicious brownies than I would selling them!

Create the Perfect Recipe, for You

Juggling full-time work and being a full-time parent isn't possible for everyone. That's why accepting help from friends or relatives can make a huge difference, especially when you're just starting up or going through a tough period.

But it's important not to become too reliant on other people. A business owner needs to be versatile and self-sufficient at times, too.

It's a fine balance when managing your own shop alongside your friends and family, and like fudge, the recipe is different for each business. Finding what works for you and your family while still bringing in profit is just part of the excitement of running your own business.

Have you ever run your own family business or worked for one of your friends? What's changed since coronavirus -- are there new opportunities, or fewer? Tell us about your experiences in the comments, below!

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