There are many reasons for choosing to go into business with family members. After all, many of us believe that blood is thicker than water. Many people tend to feel as if they can trust those that they’re related to more than others with whom they share no blood ties. By setting up a business with your loved ones, you can create a legacy that can be carried on by future generations. Working with family requires some pre-planning, though.
One of the steps that you’ll want to take if you’re planning to go into business in Utah with family members is to draft a business plan. It’s there that you’ll document who owns your St. George company and what stake each of the owners maintains. Make sure that you clearly define each of the family members’ different roles and how much compensation each will receive.
The business plan also details what happens if a family member decides to give up their interest in the company. Will they take a cash payout or retain shares in the business once they walk away? This should clearly be spelled out.
When drafting this plan, you’ll need to create a succession plan for the company. This serves the role of detailing what you want to happen to the business when your founder or primary stakeholders resign. You can designate whom you want to take over the company and how the value would be determined in your succession plan.
Although blood may be thicker than water, families often know how to dole out a solid dose of tough love. This can easily leave a family member with hurt feelings.
One of the best things that family members can do when they go into business with one another is to get outside advice from a neutral third party. Families should also keep their personal and business discussions separate.
Starting a business with your loved ones can create opportunities and wealth from which all can benefit. If you want to make sure that all family members’ interests are protected, your attorney can advise about this process.