I partnered with a family member the first time when I was 10 years old. Together with my big brother, who was 11, we sold candy to the neighborhood kids out of his bedroom. To be clear, I do mean candy as in sugary sweets, not as code for drugs, even though I guess candy is a little bit like kid-crack.
But that’s not all we did. My brother and I also had other business ventures together. We had a paper route, sold magazines door to door, and did things for WWF. That’s short for World Wide Fund for Nature—not to be confused with WWE, World Wrestling Entertainment. How funny would that have been, though? Two tweens knocking on your door, selling smack-down gear.
My brother and I have always been close and have done a lot of things together. Come to think of it, he’s been my go-to for a lot of things. When I was little and got scared one stormy night at our grandparents’ summer cabin, he held my hand the entire night. When my parents sold the house, he let me stay with him in his 220-square-foot studio apartment for three months. When I traveled to Bali in my early 20s to learn how to surf and ran out of money, he sent me some.
So when I needed somebody to partner with in my real estate investing, it was a no-brainer. But partnering with a family member may not be a great idea for everybody. So I started thinking about why that is. These are the five main things that stood out to me.
5 Serious Questions to Ask Yourself Before Partnering With Family Members
Question #1: Do you have the same goal/vision?
You don’t have to be completely alike. Actually, it’s probably better if you’re not. You don’t even have to work in similar ways. But you do need to share the same values and have a similar vision of where you want to take your business and how you will get there. This is a deal breaker, so I would start here.
Question #2: Do you amplify each other?
I’ve been married for 15 years (weird, since I’m not a day over 21 in my mind), and one thing I’ve learned about what makes a marriage thrive is this: Does this person amplify you, and you them? This means that not only do you complete each other’s weaknesses, but you amplify each other’s strengths. A business partnership is very much like a marriage, and this, in my mind, is one of the foundational pieces for success.
Related: 5 Tips I Wish I Knew Before Partnering on a Real Estate Deal
Question #3: Do you respect each other?
My brother is one of the most patient people I know. I don’t think I’ve ever seen him lose his temper. I, on the other hand, can get antsy when he’s taking his time analyzing something, because I want to go, go, go. But I truly respect his opinion, his way of getting there, and what he brings to the table. That helps me be more patient. It also helps if you like each other, since as business partners, you will be spending more time together.
Question #4: Do you have an open and honest relationship?
Being in business with each other brings in a whole new subject that may be taboo in many families: cabbage, moola, dough—money. Are you and your potential family member partner (spouses included) willing to open your kimonos and be transparent about all your financial details, issues included? This openness and honesty should be one of your basic guiding premises, not only when it comes to money.
Related: 9 Possible Pitfalls of Real Estate Partnerships
Question #5: Can you both bring value to the table?
Before partnering with anyone, not just family members, a great question to ask yourself is: What can I bring to them that is of value? If both parties think this way, it sets the stage for a win-win situation with focus on giving instead of getting. In our situation, after rigorous audio-booking (trust me, it’s totally a word) and studying the market, I brought valuable knowledge. I also had time. My brother, on the other hand, contributed a few valuable qualities—including a good job (banks tend to like that), capital to invest, renovation knowledge, and experience, to name a few. When we were kids I used to brag about how fast he could run. Still true.
2 Things Every Partnership Should Include
If these things check out and you decide to venture into a partnership, I recommend:
A Written Contract
A contract removes any grey areas should something, against all odds, happen—and not only between you and your partner. If something happens to either of you, this will help your family deal with your business in your absence. I would warmly recommend including spouses in the process to make sure they are on board as well. Even though they may not be actively involved in the business, they are still an important part of a successful partnership and business.
A Written Business Plan
Every party should agree upon this plan, and remember to include an exit strategy. This is a pretty obvious one, but lately I’ve been surprised by how often businesses fail to have a proper written plan.
These are naturally not the only things to consider, but they have been key areas for me in my pretty-fresh-but-successful partnership with my brother. We have, so far, purchased four rentals together in Finland and have just finalized the registration of an Ltd. to keep expanding our investing.
To sum it up: Partnering with a family member has been awesome for me, and it could be for you, too. But you shouldn’t do it just because you’re family. You shouldn’t do it just because they have something you need or because you think it’s easy since they’re related to you. You should evaluate the partnership as you would with anybody else, if not even closer. There are unlimited potential business partners out there, but only so many family members. Like Baz Luhrmann says in one of my favorite songs: “They are the best link to your past, and most likely to stick with you in the future.”
Would you consider partnering with family members? Why or why not?
Or if you have successfully (or unsuccessfully) done so, let us know your experiences!