538: Pros And Cons Of Working With Family And Friends In Construction

This Podcast Is Episode Number 538, And It's About Pros And Cons Of Working With Family And Friends In Construction Ever dreamed of starting a family business? Investing in a franchise opportunity with friends?   Businesses owned and operated by families can have incredible staying power. All family-owned companies, Volkswagen, Samsung, and Nike, are among the world's most successful, leading brands.   Working with family and friends can be fun and rewarding, especially in the construction industry. I know because we've been in one. But before you hire the people you care about most, it's wise to consider the pros and cons.  

Pro: Dynamics

When you hire family and friends, working together can feel comfortable and pleasant. You can vouch for their work ethic and values upfront. You already know their natural talents, abilities, preferences, and skill sets – their strengths, weaknesses, and how you can best work together.

Con: Dynamics

Regarding family and friends, modifying negative behavior or communication patterns can be challenging. What's more, it can be complicated to confront a loved one when they aren't acting in the company's best interest. The temptation to avoid conflict or hurt feelings can make managing a friend or relative tricky at best – at worst, it can become a severe liability.

Always practice clear communication. Share business policies, practices, and expectations just as you would with any employee.

Pro: Streamlined hiring

You'll save time and money when you have a crew of committed workers ready to go before you're set to launch. With family and friends willing to help you, you won't have to screen and interview candidates – or spend precious time following up on background checks and qualifications. You can hit the ground running, focusing on generating income and profit.

Con: The company has to come first

Building a profitable and sustainable business requires effective management without exception. That means sometimes it may be in the company's best interest to re-train an employee for a different role, ask a worker to take on additional responsibilities – or, in some cases, to let someone go.

When it comes to complex personnel matters, it can help to seek guidance from an independent advisor.

Pro: Tradition is seen as a strength

Strong brands are quickly built on the values we associate with family, such as honesty, trust, and enduring relationships. A recent study showed customers prefer family-owned businesses for their perceived stability, trustworthiness, and consistent service.

Con: Too much tradition can hold you back

When a family business does things as they've always been, the company can suffer from a lack of diversity and innovation. It's essential to keep an eye on market trends and changes in your industry, so you can adapt quickly and avoid missing opportunities.

Solution: Set up a board consisting of family members and an equal number of independent advisors.

A note on the spouse doing the construction bookkeeping and divorce

Here is what we see repeated many times over. Contractors cross the line and treat their spouses as indentured servants who should be grateful for a place to live, eat and sleep in exchange for maintaining a household and being an overworked, underpaid contractor's bookkeeper. They become incredibly frustrated and desperate.

In some cases, you are not at fault; you are being hammered by customers who are doing everything they can to drive the price of everything and everyone into the ground in a twisted attempt to get something for nothing, and I have a suggestion for how to fix that.

The answer is simple. We have helped save many marriages by working with contractors' spouses and showing them how to do what they are good at, like managing the money, paying the bills, customer service, and other management tasks, and letting us take care of the contractors' bookkeeping services.

Having your spouse handle construction bookkeeping can be a recipe for disaster. Mixing business and personal relationships can lead to conflicts of interest and communication breakdowns. It's best to keep these two areas of your life separate to maintain a healthy work-life balance and avoid potential complications down the line.

Ultimately, going through a divorce after being in the construction business together can be challenging. It's not just about separating personal and professional lives, dividing assets, and determining who gets what. It's important to approach the situation with a level head and seek legal counsel to ensure a fair and amicable outcome. 

Remember to prioritize the well-being of any children involved and communicate openly with your former partner to minimize conflict. It may be a difficult process, but with patience and cooperation, you can move forward and begin a new chapter in your life.

Having family and friends involved in a business can have advantages and disadvantages. 

On the one hand, having family members or close friends as business partners or construction crew can provide a sense of trust and loyalty that may not be present with outside partners. It can also be easier to communicate and make decisions with people you know well and trust. 

On the other hand, working with family and friends can also lead to conflicts and emotional tension that can spill over into personal relationships. It can be difficult to separate business and personal disagreements, which can quickly become heated and damaging. Additionally, working with family and friends may limit the pool of talent and ideas available to the business, as outside perspectives and expertise may be overlooked. 

Whether involving family and friends in a business is beneficial depends on the specific situation and individuals involved. It is essential to consider the potential risks and benefits before making any decisions and to prioritize clear communication and boundaries to maintain healthy personal and professional relationships.

Final Thoughts

Because family members and friends are personally invested in your business – both emotionally and financially – they can make fantastic employees. They'll work hard, put in the extra hours when needed, and do everything they can to ensure your venture succeeds.

The biggest challenge can be to draw the lines between work, family, friendship, and home. As an employer, it's crucial that you set boundaries, practice clear communication, and be willing to make difficult decisions so your business and personal relationships can thrive.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com