Starting any kind of business can be very risky. Starting a business with your spouse can be down right crazy. When you go into business with your spouse there are a number of thing to think about and discuss before you jump right into it. Here are 5 questions to ask before you risk your marriage and business.
- Who owns the business, who’s the boss, and who does what job? From a technical standpoint, you may indeed be co-founders, co-owners and co-sharers of profit and loss responsibility. (Although data suggests husband-and-wife businesses are more successful when one spouse just “helps” and total equity is a moot point.) But from an emotional standpoint, if you work together well, it’s probably because you have different strengths. Play them up, not down. I worked for a co-founder couple who would angrily contradict each others’ instructions when our team was on a deadline (I was a middle manager). This is business suicide. Make a plan — get your job descriptions down on paper.
- Are you really prepared to work together? Successful businesses, generally speaking, don’t start with good intentions — they start with a great idea and a smart business plan. If it turns out your spouse or life partner is perfect for a key executive role that needs to be filled in your company, great. But review how you both respond to personal crises. If you have had major blowouts over important issues such as risk management and budgeting, it’s safe to assume these will become major issues in your business. And when they do, you won’t have a spouse to confide in privately about it.
- Can you live, day-to-day, with a shared burden that never really goes away? I mean never. You wake up, roll over, and there’s your partner. Intimacy spills over into work disputes. Boundaries need to be drawn. Tempers get stirred up. And at day’s end, you still go to bed together. Come again? Saying you’ll have date nights and “no business talk at dinner” is great. Following through is harder. Half the couples I know today don’t even share bank accounts or contribute equally to household finances, let alone invest all of their assets in a single business venture. Entrepreneurship is isolating with or without the romantic element.
- What financial risks are you willing to take? If you go into business full-time together, you could also go broke together. What about your kids, or your future kids? What about your nest egg or aging parents? From special tax concerns to funding your Social Security to the possibility that either your marriage, the business, or both will fail, your entire financial future is at stake. Creating a plan can be uncomfortable, like talking about a prenup. Can you define each partner’s equity in terms of actual dollars? What will you do if one partner wants to quit? You’ll have to make these decisions in administrative ways (from payroll to stock certificates to insurance) anyway. While you’re at it, firm up an exit strategy.
- Which really comes first: relationship or business? Hint: the answer is not, “It would never come down to that.” It could, and it very well might. When the going gets tough — you’re facing a lawsuit, or considering bankruptcy — which relationship goes on the chopping block first? We decided recently that if we needed to shut our doors to regain our sanity and keep our relationship safe, we would. Other couples, particularly those with very separate roles in growing businesses, may choose otherwise, or find out that a business can continue when a marriage ends. If that business is your only source of income, you might not have a choice. Can you handle that possibility?