Pros and Cons of Employing Family in a Home Business

The pros and cons of employing family can be a big issue for a woman who wishes to become a successful entrepreneur. Even more than for man, the power woman will want to improve the prospects of a happy and fulfilling working life for family members. Therefore, deciding whether to employ family in a home business, is a dilemma for many home business creators, especially for the power woman. How should the successful woman in business approach the idea of employing her own close family in the business?

I thought I would explore the advantages and disadvantages in this often vexed question. The result follows:

Pros and Cons of Employing Family – Advantages 1. It is often possible to employ family informally, and part time.

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It can be so easy to employ family. Maybe they have a problem in finding employment and are not working at the time that they start working for the family business. Perhaps they are between jobs, and start in a temporary manner, which develops from that point. It can even happen without any deliberate thought!

In these types of situations the relationship is built entirely on trust and the work may be on a basis of task by task completion. That can mean that when things are quiet, the family employee does not get paid. This can be perfectly acceptable to family members (especially junior family member just starting out) who live at home.

It is self-evident that this can be a big advantage to the start-up business. It reduces the risk which occurs as soon as formal staff appointments are made, that salaries will have to be paid when the business is small.

While a business is still starting out, the need to make payouts at regular dates each month can create serious cash-flow problems. This is especially a serious a point to make, at a time when working capital can often be low, or sometimes almost non-existent.

Advantages 2. Avoiding Formal Contracts and Rigid Terms of Employment

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When family members are employed there is seldom a formal contract agreed, at least not at the start. This being the case, the start-up business owner can delay the time when it will be necessary to obtain expensive legal advice to write terms of employment, and staff contracts. When weighing up the pros and cons of employing family, this can be a big incentive to do it!

Advantages 3. Trust and Commitment

To employ family members removes the need for long interviewing, and once employed the business owner's intimate knowledge of other family members means that trust and commitment can be relied upon.

Of course, as soon as a family members fails to deliver the goods or service required by the business, they can be told to cease work, and this can be done without the risk that the employee might take legal action against the business owner (mother, father, cousin etc.). Another big issue to consider as one of the top thoughts when comparing the pros and cons of employing family.

Disadvantages 1. Emotional Connections Can Make a Family “Firing” Difficult

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Although, there may be no risk of a legal appeal against a family member who ceases using the services of another member, emotional attachments can make separating a family employee from the business extremely hard. An involvement in the effects, and damage to family relationships, should that person not then have enough money to live easily can mean that it is much harder to fire family!

Disadvantages 2. Conflicts Can Occur if the Skill-Set of a Family Member Does Not Match the Business Role they Seek

Very soon after they are employed, there is a tendency for family workers to decide in their own minds the role they expect to either be doing immediately, or at some time in the future.

If that role is not one which they are good at, or one which is outside the core requirements of the business, the business owner may find themselves almost forced into letting them do that work. In this way, the small family business can lose focus on the original unique core business proposition. Many businesses do fail when family members each pull a business in different directions.

Creating a suitable post for them, to avoid internal family conflicts can also prove hugely damaging as the business grows. This gets more acute as the business starts employing people outside the family.

Disadvantages 3. Family Businesses Can Become Un-invest-able When Cash Injections are Sought

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At some point in the growth of almost all new businesses, the business will need to obtain external investment. When this occurs, any new external investor / partner will be most likely to assess the prospect of whether they would be able to influence who was employed in the family, to ensure an efficient business.

Many investors are nervous of investing in any family business, because they put themselves in the position of thinking whether they would truly be able to win if they disagreed with the family, in any major difference of opinion.

Investors usually think ahead, and can be frightened off from investing in that way. The possibility that once they had ownership of a proportion of the business and said that a family member be sacked, they would be over-ruled is apparently a major concern.

Pros and Cons of Employing Family – Conclusion

The decision the power woman business owner makes about whether to hire family members, is a very important one. It can have far-reaching implications on the success or failure of the business. In our family, my sister's company which provides plumbing in Shrewsbury, she works only very rarely in the company, in which her husband is the principal and manages all day to day work. This she says is due to family tensions about exactly how the company should be run. She considers that had she worked in the company full-time, her relationship with her husband would have deteriorated. As it is the family may be poorer but the family unit functions happily, and life and business is going well.

Employing family members, can mean success for the business, or could alternatively, pull it down into oblivion. You, the business owner knows the people involved. You also know know the benefits and the risks. In short. Now the music has to stop. It's time to decide and as business manager in your employer's company, it is up to you

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