5/23/2017

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Partnering With Family Members

My Brother-in-Law Is an Accountant

People have wildly different views on partnering with family members. Some say go for it and save a bundle. Others say avoid it at all costs.

I fall somewhere in between. I believe that having family members on your team, or even partnering with them, is a good idea as long as you make an informed decision and know what you are getting into.

You'll want to go in with your eyes wide open on this one, because, let's face it, next year's Thanksgiving dinner is on the line.

Plenty of families can mix business relationships with personal relationships and do just fine. Others have not mastered the art. Only you know where your family fits in.

Having family members on your team has some pros and cons as you can see in the table below:

The Pros and Cons of Working with Family Members

Pros:

  • It's easy. This is definitely the easy way. If my brother-in-law is an accountant, I have that chore done. No need to spend time shopping around.
  • Keeps the peace. In some families, hostilities may occur if you don't use the in-house pro.
  • Low cost or no cost. Often family members will give away their services to relatives for nothing.

Cons:

  • Loss of objectivity. It's hard to have the tough conversations you need in business with a family member and still "pass the turkey" the next day.
  • Loss of bargaining power. I evaluate rates and fee annually with all my suppliers; this is tough to do with family members.
  • Loss of relationships. Families have been destroyed over bad business dealings.

Whichever route you choose--to employ the talents of family members, or to not employ them--know that your degree of success will be directly proportional to your degree of integrity. People like to work with fair and honest people.

An excerpt from The ABC's of Real Estate Investing by Ken McElroy.

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