The pros and cons of employing a member of your family

More than half of small trade business owners (51%) rely on a spouse to help run their business, according to research carried out by Direct Line Insurance, and that 31% of that help is unpaid.

The results of the survey are perhaps not altogether surprising, given that the survey was conducted among businesses with less than five employees and an average turnover of £124,000. These businesses – officially called micro-businesses – are small enough to require help from family members on an informal or ad hoc basis.

For small and micro-business owners, employing a member of the family has a certain appeal for a number of reasons. If you are bootstrapping your way through starting up, it can mean significant savings in hired help.

For home-based businesses, having a member of the family in the home might seem more favourable than a complete stranger. And if you are a parent, there is even the appeal of being able to train your teenager to help out with a few precious hours during school holidays.

The time will come, however, when you will need to employ someone on a regular basis, in which case, you will need to consider putting them on the payroll. The question is then, is it a good idea to work with a member of your family? And could you do so on an ongoing basis?

That of course depends on a number of factors.

Nowhere to hide

Can you work together in close proximity, for example, in a shared office? There are few places to ‘hide’ when inevitable disagreements arise. Anyone who has followed the very public Gordon Ramsey family feuds will know how potentially explosive disagreements can become if you’re sharing both work and family life.

There is also the issue of talking ‘shop’. While it is clearly beneficial to have your spouse or partner running the business with you to help with inevitable trials and tribulations, it could also prove to be a downfall, if you both constantly talk shop and are unable to switch off.

And if you have ‘in-laws’ working for you, there is the obvious complication of how to tackle feelings of loyalty if the working relationship breaks down. You can fire your ‘in-laws’ easily enough, but you’ll need to live with your partner for a long time after!

Who’s the boss?

If this is your business with a family member simply helping out from time to time, will they take your business seriously? Will they respect your authority? Will they understand the importance of your deadlines? How will they react if you need to point out any mistakes they may have made?

Of course, there is no reason why these matters shouldn’t be handled as professionally as possible. We all know, however, that when family members are involved, the line of professionalism can become blurred somewhat.

The survival of your business and your personal relationship could very well depend on how well you are able to handle these problems when they arise.

What’s best practice

Sage Business Expert Kevin Poutler gives some excellent advice for businesses who might be employing people for the first time. You should give the same care and consideration to employing a member of your family as you would to employing a stranger.

In addition, you may find the following tips useful:

• Carefully plan duties and put them in writing, as opposed to randomly verbalising tasks on an ad hoc basis. This will prevent any misunderstanding or frustration on either side.
• Having a written job description, including pay and hours, will show your family member that this is a real business venture and that their duties are to be taken seriously, even if they are only working for you on an ad hoc basis.
• If money is tight and you are unable to pay your family member from the outset, insist on a formal contract so that they know you will pay them once the business becomes profitable.
• Be consistent with in-house rules. If you have non-family members working for you, set a good example by ensuring your family member abides by the same rules as everyone else.
• Similarly, don’t take advantage of a family member by not allowing them the same opportunities as everyone else.

Many businesses thrive precisely because they are a family business. The familial bond can help to strengthen the resolve when the going gets tough, with each person feeling a personal sense of duty to ensure the business succeeds – a feeling which might not necessarily be shared by a stranger who simply collects their pay cheque at the end of the month.

On the other hand, many business owners would say that just because you can doesn’t mean that you should.

What do you think? Would you hire a member of your family?