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Don't Play Family Feud With Your Business

Before working with your family, make sure you get along.

Have a brother whose conception of savings is change for the laundry machine? Has your sister's bossy-teenager phase persisted into adulthood?

Take a long look at your family's idiosyncrasies. Now add to them the stresses of a nascent business. If the snapshot looks worse than Thanksgiving dinner with the in-laws, you may want to reconsider a family business.

When working with family members, the highs and lows of a typical small business will be amplified, says Nick Romeo, who works with his father at their Tennessee-based company Romeo Advertising.

82 million people -- 62% of the workforce -- are employed by familyenterprises according to the latest research from the

Family Business Review

in 2003. Even big names like

Koss Corp.

(KOSS) - Get Koss Corporation Report



are family-run. But before you and your next of kin jump on the bandwagon, rigorously investigate family member's strengths and weaknesses and imagine them amplified. "Is this something you can deal with?" asks Romeo.

More Than Milk Money

Thought arguing over who gets a bigger allowance was bad? Try it now that you're all grown up and in business.

Expect disagreements about payment to come up. "I run the company and my sister's husband does most of the labor," says Lisa Elliott of

TG Elliott Associates, a New York subcontracting construction firm. "There are times that my sister would charge me for eight hours of her husband's overtime pay when he should have been paid

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Now the company's bottom line takes precedence over her sister's spouse. "I have made

my sister aware that our main goal is the company's profitability," Elliott says.

Money can be a major point of contention in many families, so nail down compensation and percentages in lucid written agreements to avoid brawls and squabbles later, Romeo advises.

Can't We All Just Get Along?

Remember your parents' heated debates on living room decor? In a business setting, clashing opinions scream even louder, so prepared to get diplomatic.

"We work like a Japanese consensus model. Once a decision is made, everyone rallies behind it as opposed to continuing to press their point of view," says Dennis Pinto, managing director of

Micato Safaris, a tour operator and safari outfitter which his parents founded 40 years ago.

Even though you're family -- and more so because you are -- set down a partnership agreement that clearly defines roles in case of any dispute, says Harry Dannenberg, counselor at the nonprofit organization

Score NYC. Define the big issues, such as what happens when a family member moves, or when one partner wants to get back some of his or her investment.

But It's His Turn!

Passing the blame or burden between siblings is a classic move, but if nobody in your family likes to shoulder responsibility, you're in for an aggravating and noncommittal ride.

Having clearly defined roles is extremely important, says Pinto. "Make sure there's someone who can make the final decision if it needs to be made."

Family members should express what they want and know what's expected from them, but make sure everything is established at the beginning.

Think along the lines of a refrigerator chore list. Duties should be defined but not set in stone because circumstances change quickly, Pinto points out. Some projects will inevitably require certain family members to develop additional skill sets.

Relative Bliss

Despite the headaches, working with family can actually make your business life easier.

For instance, there's less management turnover because family members understand each other in a way that strangers don't, says Pinto. "When you're hiring cousins or nephews, you have more insight. You know an individual's pimples," he says.

Only venture into business with your family if you already have a great relationship and a deep reservoir of patience, Romeo adds. At all costs, don't let the family business destroy your family. For better or worse, you can't get rid of them.