Being in business with family members or close friends sounds like everything should be sorted out, right? You know each other well and feel like you don’t need an Operating Agreement.
This is one of the largest fallacies we see. We often meet with business partners who are longtime friends, or even family members and feel like because of the nature of their relationship, they don’t need to create a Partnership Charter or an Operating Agreement. I would be doing you a disservice if I said that I agree.
When going into business with a family member or friend, not only is the business relationship at risk, but the personal relationship as well. If there is disagreement that causes a dispute between the partners, the business relationship as well as the friendship or family relationship will suffers. Families no longer see each other at Thanksgiving, religious holidays, or special anniversaries. This is really heartbreaking, especially when you consider that the reason why they couldn’t prevent this was because they thought they knew each other so well.
This process can teach you that sometimes it’s not a great idea to go into business with a family member or friend. Having an objective reason to do this helps you go along with that conventional wisdom.