Pros and Cons of Doing Business with Friends and Family

Pros

  • Easy to access
  • You already have relationships
  • You already have connections

Cons

  • It can really screw up those relationships and connections in a big way.
  • Most businesses have ups and downs. The downs get pretty tough to talk about with friends, particularly if their money is on the line. It’s a lot easier to talk about the downs when you’re just out to lunch with a friend. But, if their money is on the line, they tend to get nervous, pushy, and nosy – and that’s not the kind of relationship you want with friends and family.
The main reason why entrepreneurs invite their friends and family to invest in their business is that those are easy relationships to access. Let’s say you have family that have resources they could invest. That’s really cool! Good for you, right? You know Uncle Bob, you know Grandma, but you’ve got to make sure that those positive relationships don’t become negative ones over the long run.

Business and friendships and business and family are often really hard to mix. There are some families that do it very successfully and some friends who do it very successfully, but it’s really tough to do and you should be aware of that. You know, I promise it’s not worth a family relationship or a friend relationship just to be successful and get some money. Money, power, prestige is never a good exchange for relationships, so be super careful.

For what it’s worth, that’s the way I feel about it. I personally don’t do business with friends or family. That’s just me.