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Are you crazy? You're just asking for trouble. Don't be a fool." These are just some of the responses you'd probably hear if you said you were doing business with a friend or relative. Many people feel that mixing your professional and personal lives serves only to muddy the distinction between the two. "It is very hard to separate business issues from family or friendship issues," says Jan Morton, a management consultant in Montague, Massachusetts, who has many clients that are small family-run businesses and companies in which friends work together.
Yet many people say they wouldn't have it any other way. "Friends and relatives know one another's strengths and weaknesses," says Jeff Swartz, a research associate with the Owner Managed Business Institute in Santa Barbara, California, an executive education, research, and consulting firm specializing in owner-managed and family-run businesses. "If used in a positive way, this can be a big advantage because it creates strong feelings of loyalty and trust."
There's no magical way to determine whether this arrangement is a good idea. But there's a lot you can do to make the situation run more smoothly. With that in mind, let's look at the experiences and advice of several entrepreneurs who have merged business and personal relationships in different ways and with varying degrees of success.
WORKING ON ASSUMPTIONS It's common to make assumptions about what friends and family members like and dislike or how they want to be treated. But when it comes to business, taking certain things for granted can be disastrous.
Marcia Layton, owner of Layton & Co. in Rochester, New York, fell prey to this dilemma several years ago. Layton, a consultant who specializes in writing business plans for small companies, agreed to help her friend Lanre Olotu. "I offered him some assistance in putting together a business plan. We never discussed money because he would do the work and I was just going to help," says Layton. "As it turned out, I ended up doing all the market research, spending all the time in the library, writing the whole plan, and making the phone calls."
Layton says she told Olotu that he was asking for more help than she had originally offered, and that he had agreed...