Join Bob McGannon for an in-depth discussion in this video Establish business ownership: Family, part of How to Start a Business with Family and Friends.
- Virtually all of the entrepreneurs I know will tell you that ownership of a small business is more work than anticipated. They also say the rewards of running a business are extraordinary. In this course, we'll discuss four ownership models for a small business: single owner, married owners, multiple owner structures, or ownerships supported by shareholders. We'll discuss multiple owner structures and shareholders in the next video. Here, I will talk about the pros and cons of single and married couple ownership models.
First, there's the single owner. With a single owner, there's no question where the accountability and decision making lies, and the vision for the business doesn't require debate. The direction for the business is clear, and selling the capabilities of the business are usually done with passion because it comes from the owner. On the other hand, there are distinct disadvantages. The single focus also means your business is limited to one person's vision and capabilities. Without a broad set of skills, the prospects of the business could be limited, unless the single owner can convince others to be part of a new fledgling business without an ownership stake.
Next, let's discuss married ownership teams. Husband and wife teams typically know each other well, and enter the running of a new business with specific roles in mind. The capacity for work is often doubled, versus a single owner. If the marriage is strong, support for each other helps get the business through thick and thin. This ownership model also helps when recruiting others for the business, as the vision of the business is typically well defined and different personalities and focus from the married team can be used to sell the ideas more broadly.
The disadvantage of married couples as owners is that both business and family challenges affect both owners. There can be no relief from the pressure, as the person you typically turn to when blowing off steam and obtaining support is stressed by the same things you are. Instead of getting relief, you talk about the concerns and can whip each other into a frenzy. Married couples should also refer to the movie on if your office is your home in this course, as the separation of personal life and work can be a big issue.
Take it from me. I have run a business with my wife for 14 years. Ensuring you have things to do together that aren't work related is critical to your sanity. This can keep your marriage strong, and it needs to be strong to live with both your work and life partner. With either of these models, the thing I would recommend is to carefully assess your desire and ability to flexibly dedicate hours to establishing and running your business. Starting a new business presents many challenges, and often includes high pressure deadlines to serve your customers during their hours and time frames.
For most business owners, a 40 hour work week will be a thing of the past, until you get things running smoothly and can hire help to support your business. Personally, I would never go back to being an employee of another business, but it isn't because it's easy or the hours are light. It's because I thoroughly enjoy celebrating all victories and learning from my drawbacks. I also get a thrill out of seeing others join our business, help our customers improve, and grow personally from the process.
- Clarifying roles and boundaries
- Discovering compatibilities and styles
- Understanding taxes and employee pay
- Having an exit strategy
- Communicating effectively
- Working day-to-day with family with friends
- Balancing family and business roles
- Handling a family crisis