I hired my friends and family, and I’d do it again

John, Paul, Kevin, Rachel and Dave

Not too long ago I searched Google for the phrase “don’t do business with friends.”

Back came 1.4 billion results littered with warnings and tales of woe.

Eager then to explore the other side of the coin, I deleted the word “don’t” to search for “do business with friends” and – as if pleading with me to reconsider – Google Suggest appended my query and served up results for “never do business with friends” instead.

Point taken.

Ironic perhaps from a company founded by budding Stanford friends Sergey Brin and Larry Page…but clearly, conventional wisdom is that doing business with family and friends is a risk that’s just not worth taking.

Here’s why I believe the conventional wisdom is wrong.

Over the past 10 years I’ve been building profitable businesses that have now generated over $50 million in sales. Not only have family and friends been a part of that success, I believe they’ve contributed enormously to it.

In fact, it’s hard for me to envision having built such a versatile, highly cooperative, and expansion-minded team, any other way.

This became especially clear during the launch of MeetingBurner, which was quite possibly my most ambitious project to date.

We set out to develop a faster, better platform than our billion-dollar competitors GotoMeeting and Webex – and we did it with a remarkably small but cohesive team built around close family and friends.

And I do mean close! The core team includes my brother, my brother-in-law, my cousin, my close friend, and my wife (we just celebrated our 17th wedding anniversary, and we’re still going strong), all of whom were critical to the success of the project.

Looking beyond MeetingBurner, my team also includes my uncle, several more friends and even a few former customers. In all, more than a quarter of my current staff is made up of family and friends.

The benefits: Why I do it

There are so many good reasons to work with people you’re close to.

First and foremost, these are the people that you know the best. You know their strengths and weaknesses better than anyone you’ll ever interview. While many great interviewees end up being mediocre employees, I find the opposite is true for friends and family. They’re more likely to meet or exceed expectations than fail to live up to them.

I also find that they tend to be in it for the long haul. By and large, they relish the opportunity to take on more and more responsibility for a greater share of the success, and are eager to grow within the organization rather than leveraging the position as a stepping stone to something better.

The other benefits are more personal in nature. When you consider how much of your life you spend working, I believe we ought to enjoy it with the people we know and love. And who better to share in your struggle and success? Money can be a divisive issue within a family and nothing washes away familiar feelings of jealousy and rivalry like riding in the same boat.

The rules: How you do it makes all the difference.

Just to set the record straight, I do understand the risks of working with friends and family. I simply believe that if you respect these risks, and take the proper actions to mitigate them, you’re likely to have a rewarding experience.

In other words, how you do it makes all the difference. Deciding which friends and family to hire, and how you’ll structure your partnership can be the difference between walking a tightrope without a safety net and crossing a steady bridge.

With that, here are 10 rules to live by…

1. Charity never. Mutual benefit always. Hiring or partnering with a friend just to be nice or because you feel bad, IS bad! Not only is nepotism a great way to anger and offend your loyal crew, but there are so many better and more lasting ways to support the people you care about. Work with someone you care about only if your personalities are a good fit, and both parties are highly qualified to fulfill their roles and financial obligations. Then structure a deal that makes the partnership rewarding and mutually beneficial.

2. Don’t look for favors. My Dad is an excellent attorney whose services would undoubtedly benefit me and my brother as well as save us a ton of money. He’ll always be a trusted advisor, but never our attorney. It’s worth the added expense to have an attorney who treats us with the priority of a paying customer, and to afford that same courtesy to my father and the clients who rely on him.

3. Don’t talk anyone into working with you. The last thing you want is for a friend or family member to come to work for you and learn later that you were over-selling the opportunity. Be honest and upfront, and proceed if they’re as excited by the opportunity as you are.

4. Set expectations. And put it bluntly. Like any working relationship, there should be no mystery as to what is expected of either party and who is working for whom. Hammer out the details in writing so that responsibilities are crystal clear to both parties, and fully agreed upon.

5. Exit strategy. Partnerships don’t always work out. That’s why it’s absolutely critical to have a plan for what happens when they don’t. I was eager to work with my brother-in-law for a long time, but he had a successful business in Arizona. Finally things aligned, but before we shook hands we determined a list of circumstances under which we’d have to part ways, and agreed exactly what would happen if those circumstances came about. Be 100% clear on what is going to happen if you fail, and write it down! When necessary, involve spouses as well to ensure that everyone has the same expectations.

6. Start with a trial run! Years ago, I hired a great salesperson who was also a good friend. We had every reason to believe that things would work out, except for the fact that sometimes, they just don’t. So we set up a 90-day trial period with an out for both of us. When we reached the end of it, it was clear that the partnership was not meant to be. Having the trial-run in place made it easy to end the working relationship, and easy to maintain our friendship. I’ve since hinged every close working relationship on a similar trial run.

7. No drama. No resentment. Even if it’s not work related, if there’s drama in your personal relationship don’t start a working one. Resentment and frustration over one thing has been known to bubble up over another.

8. When in doubt, don’t. It’s normal to have reservations about working with someone you’re close to. Strange hunches and lingering doubts are different. You should only hire or partner with someone when you go into it feeling good, hopeful, and excited.

9. Be open. Before you start working together, openly voice your thoughts, concerns, wants, and needs. And once you begin, both parties should be open and communicative about how the relationship is working out. Don’t let things fester. It only makes things worse.

10. Hire Slow/Fire fast. Take your time deciding if a friend or family member is a good partner, and be deliberate when laying out expectations and a game plan. But when things go bad, end them fast. Job changes are life-disrupting events. It’s best to fire people early in the relationship while it’s still a period of transition. If you don’t like someone early on, it never gets better. It just gets harder.

Closing “Arguments”

My businesses have been able to grow faster, transition smoother, and operate better because my family and friends have been a part of them. More importantly, the ability to work so closely with people we’re close to has enriched our lives as well.

The pervasive warnings on the topic aren’t unfounded. They should be taken seriously. But like so many things in life, it’s not what you do, but how you do it that makes all the difference.

John Rydell.

About John Rydell

John Rydell is a seasoned entrepreneur with over 20 years of experience starting and growing technology and telecom companies. John currently spends his time as the President of Networx Online, a CRM-in-the-cloud business that provides online marketing solutions for network marketers. John is also President and co-founder of the sales automation tool PhoneBurner.com, as well as the popular free online meeting provider, MeetingBurner.com. You can connect with John via Linkedin or Google+.