Ahhh, family. We love family. But family is also complicated in many ways. Ultimately, family can often be the only people we truly trust enough to do something like start up a business with them.
This alone is probably the biggest point in favor of working with family. It’s very hard to get away from family and there is (at least there is supposed to be) a certain bond there, and a trust you can’t easily get anywhere else. For this reason, a lot of successful businesses are in fact family businesses.
The potential problems and disadvantages tend to crop up because of problems or potential problems with family dynamics. Perhaps the biggest problem with family businesses are people giving orders when maybe they don’t have the authority to do so. Another one is that invariably lazy family member that doesn’t do his or her share in the business but still expects his or her share of the profits!
Perhaps the most important thing that can be done to keep a family business running smoothly is to very clearly and strictly define everyone’s individual role in the company. This can go a very long way towards mitigating these two potential problems just mentioned in the above paragraph.
Another potential issue is bringing work problems into the family’s personal life and viceversa. To a certain extent (for example, severe financial problems) this could be seen as unavoidable. However, it’s not always necessary or avoidable to have personal problems spill over into work and vice versa. One good rule is to never “talk shop” when having a family meal together. You need to look for spaces where the family does things together completely unrelated to the business, so that everybody can get a mental reset.
Having a business where a bunch of unknowns get together and work together avoids these problems, but has its own set of very serious issues to be dealt with. The biggest one is that your odds of your margins walking out the back door are much much higher with people who have no stake in the business. Lamentably the business world is full of examples of embezzlement and scams, and also of mistreatment of workers by their higher-ups. This is a point in favor of keeping it in the family, for sure.
If you do decide to go the family route, there is some really good advice here about exactly how you should go about doing it.