Starting and growing a business poses many challenges, throw a romantic relationship and children into the mix, and you have what could be a very stressful undertaking. But, working together also has many advantages and, with the right attitude and legal paperwork in place, can be highly successful.
Family business expert Andre Diederichs defines the term co-preneur as a husband-and-wife team that starts and runs a business together. This only morphs into a family business if other family members join the company or take it over at some stage.
Co-preneurs face a specific set of challenges. Diederichs advises discussing and confronting these early on to eliminate some of the risks associated with going into business with a spouse. For instance, duties must be clearly divided because “who is responsible for what” is a typical point of friction. Co-preneurs should understand their respective roles and duties and must be able to step into each other’s shoes if necessary. Trust, as in any good business partnership, is crucial.
Co-preneurs with children face the challenge of juggling their business and parental duties. When both parents work in the business their traditional roles may change as mum or dad take on new or unconventional duties.
“But the biggest challenge for these husband-and-wife teams remains balancing their personal and business life,” says Diederichs. “In order to run a successful business, should have strong divisions between when they are working and when they are socialising.” Too much of either can be detrimental to their success.
Putting it on paper
In a perfect world, husbands and wives would be equal shareholders in the businesses they start, and run them together forever, says Diederichs. “Otherwise one is always the boss, which could lead to an employer-employee scenario, which is not a co-preneurial ideal,” he adds.
Whatever your set-up, it is crucial that you put the basics down on paper by drawing up a partnership or shareholder agreement.
The end of the relationship
Divorce and death are real threats to any business. Co-preneurs should discuss these scenarios and put something in writing in their partnership agreement. “It’s much easier to discuss these issues while things are friendly than when people are upset and nobody wants to talk,” stresses Diederichs.
In the event of a divorce or if a couple decides to end their business relationship, the best solution is often for one to buy the other out, explains Diederichs.
Husband-and-wife teams should also look to protect their businesses by taking out life insurance and by stipulating that their partner automatically inherits their shares. “Things become very complicated when business shares from a partnership ends up in a personal estate,” explains Diederichs. “I would also strongly recommend that co-preneurs take out key man insurance for both parties, especially if operating in specialised areas where skills are difficult to replace.”
Succession planning is an important consideration for all small businesses, co-preneurial partnerships and family businesses. “Plot where the business is going and what will happen when either party wants out right from the start,” advises Diederichs. “Succession plans in the manufacturing or retail environments is often less complicated than in the service sector where it may be almost impossible to sell because the individual who is retiring or opting out is the only ‘asset’ of the business.”
Co-preneurial partnerships are special relationships that require the right mix of skills and personality traits to be successful. If you know and appreciate your partner’s strengths and weaknesses and don’t mind sleeping with the boss, this could be the right move for you. Just remember you can’t go home and complain about your business partner!
- You can enjoy yourselves together, creating new memories over time.
- You can engender an optimum team effort.
- You are always in contact with each other.
- You always have people whom you trust that you can talk to during difficult times.
- Family members, including partners, get to understand and know each other better over time, thus creating a stronger bond. In fact, working together often makes a marriage stronger and better able to withstand disagreements.
- There is greater flexibility with regards to business activities and family activities, particularly in relation to working hours, raising children and career development.
- Business pressures can sometimes overtake the romance in a marriage.
- Some couples find that their behaviour while operating the business is not as relaxed as it was previously in the family home.
- It may be risky to generate all the family’s income from a single source. If a business fails, the family’s resources and stability can then be endangered.
- A co-preneurial family business may not provide a continuous stream of income, particularly in the early days of the business. This is why some couples prefer that one of them start the family business while the other continues in employment, thus providing a steady income until the business becomes financially stable.
- Some co-preneurs, particularly the male in the partnership, may experience a loss of identity and individualism when decisions are made jointly. Similarly, if work roles are differentiated in a very strong, male-dominated way, the female partner may feel that her abilities and contributions are being diminished.
- The work and pressures of the business can infringe on home life, especially if the office is located at home.
- Some co-preneurs may find it difficult to separate criticism in the workplace from a loving home relationship.
- (Source: Manage Family in Your Family Business, Andre Diederichs and Gideon Maas)
* This is an abridged version of an article that first appeared in Your Business Magazine.