It’s not unusual for loved ones to start and build a business. Couples often share the same interests, values, short- and long-term objectives – they think alike, and that’s a positive for business success.

However, careful preparation prevents misunderstandings that can undermine a loving relationship. What sounded like a good idea can turn into a nightmare unless you set down some rules, expectations, and a detailed understanding of business and personal life, and the lines that define these two distinct aspects of working with a loved one.

Compare business values before working with a spouse. You may be a workaholic and love the daily challenges of the workplace, while your spouse prefers a round of golf twice a week. Also, what are your spouse’s business expectations, and how do they differ from your own? You may see this as a life-long endeavor, while your spouse plans to sell the company once it creates a reliable cash flow. Talk about expectations, objectives, individual and business goals before your spouse becomes an equal partner.

Get Legal First

It may seem strange to draw up a contract between your beloved and you, but getting it down on paper can save misunderstandings down the road. Each spouse knows what to expect, and what’s expected by the other spouse.

Carefully create an understanding that answers common questions: Can other family members work in the company? Under what terms and conditions? How will the company be divvied up in the event of a sale? Do the kids get a piece of the profit? How will business assets be handled if one spouse is no longer a part of the business, and how will disputes be resolved? Set up buy-sell contracts in the event of a divorce or the loss of a loved one. Try to anticipate the best and worst case scenarios to protect your company, yourself and your family.

Evaluate Personal Strengths 

One spouse may have the ability to “own the room” during a sales meeting, while the other is a meticulous record keeper – totally detail-oriented. What are the individual strengths and talents of each spouse? Develop a business and revenue model that effectively uses the strong points each spouse brings to the business.

Set Clear Boundaries

In a good business relationship, solicit your spouse’s opinions, but also agree that Spouse A is the decision maker on marketing and Spouse B will handle all order fulfillment. Spouses may disagree, but with clear boundaries, each business/life partner has control over different aspects of the business.

Keep business and family matters separate.

Your legal documents should address the distinction between business activity and personal life. Also, though it may be hard, don’t take business home with you. You may not agree in the office about a new hire, but that shouldn’t ruin your evening. Try to resolve all business differences at the office, all personal differences at home.

Compromise.

It may do more harm than good to disagree with a spouse’s business decision. Attempt to find middle ground by giving in to get something you want. Let your spouse handle his or her areas of responsibility without looking over any shoulders. Choose what topics are worth discussion and debate and which you can let slide, even though you don’t agree.

There are many married couples and life partners who have combined their talents to create business success and relationship success. The essential key is communication before an agreement is reached, and an agreement that is respected each work day.

Prevent a work relationship from undermining a loving personal relationship by talking it through before you work and share your lives together 24/7/365.

 


The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice.

For more information about family-owned businesses, including exit strategies, visit Nevada State Bank’s Family Business Resources web page.