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6 Reasons Why Running A Family Business Is Risky for Your Family’s Relationship

by ideaschedule
Family’s Relationship

Every family aims to grow and achieve their goals together in terms of personal development, learning, maturity and of course, finances. Needless to say, you want your whole household to prosper while being productive. You dream of seeing everyone in your home and your home as a team to be financially stable or best, abundant. Besides having individual jobs, one of the ways many families attain and try to attain that is by running a family business.

Basically, a family business is a business owned and handled by a single family. The founders, leaders, managers and facilitators come from the same blood. If not most, all the employees and staff are family members. Depending on the family’s preference and need, they can hire some nonfamily workers too.

At first, starting a family business seems like a flawless plan. Thinking of, talking about and hearing it sound easy, like your family just needs to brainstorm, organize and take charge of this and that. It appears to be simple, but it’s really not. Well, in the beginning, it may be quite as easy as pie, but not for long.

The truth is that there are so many twists, turns, traps and tangles that your family may experience once you decide to launch an enterprise. It doesn’t matter what industry, size or reputation your family business is in or has; it cannot be totally exempted from possible struggles faced by most family-owned ventures. To be exact, it can affect your family’s bond and treatment with one another in many ways.

Be enlightened and equipped before you finalize starting up a family company. Here are 8 reasons why running a family business is risky for your family’s relationship.

1 – Family Business Involves Money: Spending and Profiting

When negotiations and agreements involve money, they are downright serious matters. People agree because of money, and sometimes, people also disagree because of money.

A family business is a business. There is spending, which includes some family members to hand out or contribute money to start the business, to keep it going and to take part whenever the need to pay some business-related things arise. At the same time, there is profiting, which includes getting back what the family has invested, earning the fruits of the family’s efforts, and distributing wages to everyone part of the business.  

All these and more can be risky when the feeling of “unfairness” or “inequality” is felt by some family members. A common instance is when some feel like they do a huge part in the business yet they get the same merits as those family members who do less than they do. Issues may arise when contributions and distributions of finances are not clearly discussed among the family members.

2 – Separating Personal Issues and Business Matters Is Not Easy.

Fine, everyone knows that it’s a business although it is a family business, and that you should set aside first your concerns at home whenever it’s time to work. However, it’s easier said than done, especially when emotions are involved.

When you just had an argument at home, but you have to help each other on a big business project in the office, that’s not fun, right? You’ve just felt hurt and offended by the remarks of your relatives. There’s someone in the family business who’s mostly disagreeing with the way you handle the business. You have been hearing false rumors in the family, and they’re affecting you all and the enterprise. These are just some examples.

Separating personal issues and business matters is totally not easy. Oftentimes, it’s the hardest thing to do when you’re handling a family business with relatives you’re really close with.

3 – Over-Familiarity Can Become A Hindrance to Productivity.

In a family business, it is highly important to keep in mind that you should treat each other as workmates or business partners when you’re in the workplace. Conflicting roles can be a hindrance; that’s why you should clarify the boundaries that divide home and work.

Over-familiarity is a dangerous and dreadful obstacle in the family business. It can become a stressful inconvenience, specifically if you’re the one leading the venture or if you’re one of the hardworking members.

Because you are a family, there might be times when some relatives are negligent or unbothered by the responsibilities that they should be accomplishing. When they miss deadlines or fail to meet requirements, they think it’s not a problem because you know each other so well. Over-familiarity causes those who have it to take for granted the family business.

Worse things happen when you try to call them out, correct or criticize them because of their performances in the family business, they get instantly offended. You become a bad person to them just because you’re reminding them that it’s still a business after all.  

4 – Lack of Formally Written and Signed Agreements Because “We’re Family”

One unsound misconception and mistake that many families that have a family business commit is ignoring or taking lightly the need for tangible contracts. The lack of formally written agreements just because “we’re family” is harmful, if not now, for the future.

Yes, you are family, and that will never change. Probably, you live in the same house or village. You are never out of each other’s contact. But what if in the future, some disagreements arise because of misunderstandings about the settlements you actually had before beginning the business? And you have no proof to depend on? That becomes a tremendous problem. One might appear a liar or a contract violator in the eyes of some family members.

When there are no written, printed and signed documents of your family business’ terms and conditions, it’s as if you’re going to play with fire. 

5 – Family Businesses Are Passed from One Family Member to Another.

Children must be grateful for the inheritance that their parents entitle them to. When it comes to family businesses though, it’s common for families that are not really in the best terms to fight over the position of the successor.

Because family businesses are passed from one family member to another, this could present some disputes, particularly when the children or heirs of the predecessor don’t have a good relationship in the first place, or when a sense of bias is felt. 

6 – You’ve Heard of Relatives Suing Each Other Because of Family Business Disputes.

This does not only exist in dramas but in real life too. Some people coming from the same family sue each other because of family business feuds. It’s sad to know that family members use their lawyers to fight against each other. This occurs when enormous conflicts happen, including the unbelievable deceits in the family just because of money and power.



Absolutely, being able to give rise to a business with their own beloved family is one of the most fulfilling pursuits that people, who want to prosper with their loved ones, can have.

Family businesses are indeed advantageous in many ways, such as tightening your connection, learning more about every member, exercising teamwork, and flourishing with one healthy goal. Staying beside each other most of the time is another benefit of operating a family business because it’s something that most families today can’t do due to busy personal schedules.

It’s just that there also are risks that you must be aware of and prepared for if you are looking into touching off a family enterprise. Whether you like it or not, your relationships with each other will be affected and changed because of your family biz. Of course, misunderstandings and disagreements are often inevitable. They can taint and ruin your family.

However, if you want to succeed despite all the trials that you may face while running a family business, all of you should be mature and open-minded enough to prioritize your family’s relationship at the end of the day. Sometimes, you may argue and yell at each other, slightly hurt their feelings and be offended too because of your business, but don’t forget to talk things out, forgive and be sincerely sorry.

You will most likely win this if you start nurturing positive family relationships first at home, so you can enjoy a positive business relationship at work too.


Nicole Ann Pore is a writer, an events host and a voice over artist. Quality and well-researched writing is her worthwhile avenue to enlighten and delight others about things that matter. She is a daytime writer for Adams Lawyers, a team of professionals that offer well-rounded service for all legal needs. Nicole graduated Cum Laude from De La Salle University Manila, Philippines with a Bachelor’s Degree in Communication Arts.

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