By Laura Howe, regional banking director, Wells Fargo
For nearly all small business owners, business ownership is a labor of love. Yet running a business with your loved one can bring on additional challenges that may take all the romance out of a relationship.
The challenges that face a typical business owner – working 24/7, operating on tight budgets, and wearing many hats – are often intensified when a spouse or significant other is a business partner. Yet many couples have achieved success both personally and professionally working together, which can offer lessons to all small business owners.
For National Small Business Week (April 30 to May 6), here are four tips that every pair who run a business together can put in place to help ensure their entrepreneurial partnership is as successful as their romantic one:
Define roles and responsibilities
It’s important to define roles and responsibilities in every business partnership, particularly for couples who operate a business together. The old saying “opposites attract” can often mean that each person brings a unique set of skills and strengths to a relationship, something that should be harnessed in a business partnership.
As you’re developing your business plan, take time to identify your respective strengths and passions, and divvy up the business operations from there.
For example, if you’re highly organized and love crunching numbers, and your partner is more energized working with people, it probably makes sense for you to run the books while they manage customer relations and new business efforts.
Make sure to clearly outline and document the agreed-upon company structure, responsibilities for each role and each individual’s ownership stake. Commit to regularly revisiting your business plan to ensure the structure is still working and company goals and objectives are being met; adjust roles as needed.
Create a financial plan and long-term strategy
Money and cash flow issues can certainly create havoc in a relationship and for business owners. When you’re running a business together, it’s important to be on the same page when it comes to financing the business and expectations for revenues.
Make financial decisions early on and strategically, such as how much of your personal finances (if any) you might use to start or run the business, if you’ll tap into savings accounts, cut on living expenses, or maybe have one partner keep a part-time job. Whatever the options are, be prepared to have a solid financial strategy as part of your business plan.
Also, one area of business operations that is frequently overlooked is the exit strategy. Winding down is a crucial stage of the business life cycle and something that should be addressed early on. This is especially true when owning a business with your loved one, as emotions can sometimes get in the way of tough business decisions.
While it’s uncomfortable to think about things going south, an exit strategy will lay out a clear process to follow if an unfortunate situation occurs. This strategy should outline what will happen if one partner decides to leave the business to pursue other opportunities, or there is a need to close the business for other reasons. Whether the business is sold to an external buyer or liquidated, a business banker or tax adviser can help establish a plan that works for you.
Focus on trust and communication
Once you have agreed to the assigned roles, have a documented business plan and financial strategy, you’ll also need to ensure there is trust, support for one another, and open lines of communication.
It goes without saying that running a successful business with your spouse could entail difficult conversations. For example, you might not want to break it to your partner if their performance isn’t up to par, or if they keep making decisions that are hurting the business ― but communication is key.
This will help you handle problems in the long run, and could also help strengthen your relationship at home, too.
Separate work from personal life
One final tip for couples in business together is to take time for each other outside of the business. Most small business owners will tell you that the line between work and home is often blurred, and this applies even more to couples who work together.
To ensure a healthy work-life balance, set clear business hours and respect them, and carve out time away from work to do things that you love.
Going into business with a loved one is hard work. However, many couples who have found success will tell you that the benefits of being in business together are worth it. By laying the proper foundation in the beginning, having strong trust and communication, and setting clear boundaries, owning a business with your loved one can be an incredibly rewarding experience.