1. Differing expectations regarding will be put into the business or taken out
I was once consulting to a company where the two equal shareholders worked in the company. They had worked for another company for 15 years as employees before starting their own company. As colleagues they had got on very well.
The problems that arose:
- ·Shareholder ‘A’. He realised that in his own business he would have to work extremely hard. He had envisaged working at least12 hour a day – and he did. The business needed small delivery vans. He thought it would be a good idea to use these as transport to and from home – thus saving the cost of buying cars.
- ·Shareholder ‘B’. At last he felt free of the constraints of regular working hours. Now he could come and go as he liked – and he did. Golf on Wednesday afternoons was one of the benefits of being his own boss. Being a very status conscious person he felt that he needed a Mercedes to fit in with his ‘image’ of being a director. He also used a company credit card for entertaining – not clients but friends and family. Expenditure like this not a legal tax deduction – and he was not being fair to his partner. Oh, and the trade show in Germany that they both felt that they needed to attend. He wanted to take his wife and children along – and felt that the company should pay their costs. Wasn’t this what had taken place in the company where they had previously worked?
2. Family in the business
You need a bookkeeper. Your wife has worked as a bookkeeper - so why not employ her in the business.
- She was a bookkeeper at Global International Corporation where she worked on a small part of the entire accounting process. She’ll probably be lost trying to do everything from A to Z. When the working shareholders are away from the business there may also be the danger that she thinks she’s the boss and in the process annoys the staff – I’ve seen this happen.
- Your husband is Chief Accountant at MegaBucks International. He’ll do the ‘books’ at home. If he’s a senior accountant at some company he’ll be very rusty at the details of bookkeeping, He’ll also be bored doing it – and, of course, being a busy man things will fall behind.
Employing family members in your own business introduces a ‘political’ dynamic which can strain relations between partners. This is another thing that needs to be agreed on upfront.
Going into business with someone is like getting married. It can be just as expensive, emotionally and financially, to break up.