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Ask Allen: Should I Hire a Family Member?

I have a business idea and I am eager to get started. Is it smarter to hire people that I am close to, or should I stay away from hiring friends/family members to help me start my own journey?

The short answer is that it is generally preferable not to hire family members and close friends, especially when you are beginning your first entrepreneurial jump into the swirling pool of business ownership. A new business is fraught with problems under the best of circumstances, but it also represents untold opportunities.

Not having any mitigating details, and there can be many, I will assume (a) that the family members and friends you mentioned will be employees and not part-owners, (b) that this will be your first business venture, (c) that you are young – possibly within the 25-35 years old range, and (d) that you are not already experienced in all aspects of your new endeavor, especially management.

There are myriad factors to consider when opening your own business; please check pertaining to the subject; and please consider attending a roundtable session on the topic.

Back to your specific question, family, and friends, however well-intentioned, invariably will have any suggestions, criticisms, etc. pertaining to your decisions, whether you will have asked them for advice or not. Additionally, their judgment will always tend to be influenced to a degree by their previous relationship with you. They will tend to question your decisions more than employees without close personal ties. In fact, the “employer/employee” relationship itself can become quite muddled, depending on the individual circumstances (parents, siblings, cousins, life long friends, etc.).Remember, you may have to fire them someday. Ask yourself how that will feel around the Thanksgiving table or at a party the next weekend.[There are situations in which these ventures have worked well, but given the limited information available at the moment, I reiterate my original suggestion that non-family members and close friends be employed.]

You might wish to consider having certain of these relations and friends to serve on an “advisory board,” so to speak. You can present ideas, plans, etc. and seek their advice; but everyone should know that you are making your own decisions after seeking their counsel.

Finally, in keeping with the advisory council concept, it is an excellent idea to pick two or three trustworthy and successful individuals in the professional community; e.g. attorney, banker, CPA, etc., with whom you can consult on a periodic basis. You will find that their individual perspectives can be extremely helpful in both formulating and implementing your plans.

Hope this helps, and please consider attending one of our sessions for more input. There is much more to consider about opening a new business than the single, but important, topic we have addressed above.

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