As you can imagine most of the people who knew me started getting ideas. The ‘best” one came from a relative who doesn’t even call to tell me happy birthday when he should do this, but who was interested in getting into MY business as soon as he heard about my new status.

As an associate.

Yes, we all laughed ourselves senseless after hearing he’s “willing” to come take 50% of the profits in my firm, started on my own money and of course kept going for months already on my own work.

After having a good laugh about this I told my cousin he migth work in my small firm only if he started knowing CSS that well as to make him a good addition to my “team”. Of course the “what’s that” that followed made me realize hiring him anytime soon wouldn’t be an issue anymore.

Many business owners complained about having bad deals or making not so good employees out of relatives or close friends. In many relations people are not able to see the difference between “OK, we’re working now” and “let’s have some fun, as friends”. From the moment your employee doesn’t see you as the boss but as the pal who’s “playing boss” it all goes downhill.

My experiences were good or bad. I had some bad clients out of friends and this made me more careful in the future. Even if I might come with a better price for them, getting my money from these clients is now a priority. “Fool me once ..”

As far as working with friends go, I had only one experience. A very good one, with my closest friend, Adi. We’ve known each other for many years and we are both “manly women” so to say. Without the hysterical moments some women might have, telling each other if there’s a problem and still having a good understanding of our limits and business obligations.

Working together on some of my projects was always a nice experience and the fact she is a good reliable person made the experience a success.

As my small firm will grow, I might consider hiring one of my friends or relatives (not the cousin who was shocked about CSS). I do consider there are some things I should have in mind, so that the overall experience would work:

1. I need to make it clear who’s the boss

My cousin wanted to be an associate, even if he didn’t contribute a single buck to my firm. If I was to hire someone I know that well, we need to set it straight from the start: I own the thing,  I am in charge. YOU will be my employee. Can you live with this? Cool, then we go further.

2. Work is work and fun is something else

I tend to be a very relaxed person. I am not that demanding and this shows. We all need to realize what tasks need to be fulfilled. If you’re not competitive, you’re out. A bad employee makes me lose money. We can work together as long as we make the distinction between play time and serious business.

3. I don’t require less from a friend than from a total stranger.

In some cases I might be a bit more understanding with my closest friend for instance. But, if that person will work with me a visible progress is needed. I might hire my friend and give that person some time to grow and meet all my expectations. Still I want that friend to be QUALIFIED for the job and to make serious progress all the time.

I would hire my cousin, since he was the first example, if he took the time to learn web design. I might be a tad understanding at first, since he’d be a beginner, but I would expect him to make up for the things he’s not that prepared. And do it fast. I can always use a good employee, who’s learning fast, but a bad one would drag my firm down.

4. The quality of that person is VERY IMPORTANT.

This should be the first condition: I need quality people. We all have relatives who are not the best people around, even some of our friends lack certain qualities. My best friend was for me an excellent partner in some of my online ventures since she’s an amazing person. I was able to leave her ‘the keys’ to my entire network, all hosting accounts (with all my clients accounts) and not fear she’d do something to hurt my business.

Too many friends expect to get away with less quality work and mistakes, because of the special bond they have with you, but this would only harm the business and that relationship in the end.

5. All cards on the table from the start.

In such a possible situation, hiring a good friend or relative, all requirements should be known from the start: both parts should know what is expected from them and how the business relation should work.

In this matter all contracts and deals should be run in a correct official manner. Any “let’s chill about this, we’re friends in the end, we’ll work it out” migth bring up bad situations: the friend doesn’t do his/her part of the job, is not pleased with the payment, considers he/she should have a better position in the firm etc.

Telling my relatives from the start: “I want him to know this to work with me. He will be my employee, I will pay him << this >> and expect him to cover this area of our business. I am the employer and the boss, since it’s my own firm and I am the only associate in the “company” ..” was a very good idea.

At last they realized I won’t hire him just because we are relatives and that he needs to treat the job as any other, where he doesn’t have such a bond with the owner.

If (by a miracle) he starts knowing HTML and CSS and all I need him to know to delegate some of my own work, he’d know from the start all the aspects of our work together. It will surely save me some future headaches.

Many of my friends who are also business owners advise me to not hire close friends or relatives, because of the so many bad stories out there or experiences they had. I try to keep an open mind about this and not ignore the possibility. But I will try to be cautious though.

Have you ever hired some friends or relatives? Have you done business with them? Was this a good or bad experience? Do you against this?

Related:

• September 29, 2008 -- Start low or get a 200K loan? (19)
• April 27, 2008 -- How to attract clients: would you like to drive this? (4)
• April 5, 2008 -- Is a small business pathetic? (7)
• March 7, 2008 -- My way to see a portfolio … (1)
• March 7, 2008 -- Do you want to be efficient? Learn to delegate! (0)

Still .. we’re not talking about the low quality of information or the fact it takes 10 spam blogs to find a good one, but we’re gonna chat a bit about the advice I read in one of the few decent ones I laid eyes on these days: don’t stay on a small budget or “tight money”, but go there and find a good loan for your business.

Don’t know how it’s in your country (I assume it’s not good either), but in mine the banks have stopped loaning money and, if they do loan, the interest rates are sky-high and the conditions very very strict. And still, while many firms close their doors now being hit by the recession, some still think it’s a good idea to start a business with a bang by getting a good loan to kickstart it.

I don’t have anything against the idea of loaning money as long as YOU KNOW you will succeed. If I am almost sure my small company will hit big and the loan would help me maximize this profit and be able to pay for it fast, consolidate the business and also be on a “plus”, I see no reason for not going to the bank now. Be it strict, the loan still helps you a lot and all the added costs are covered by the huge profit you’ll be making.

And still … how many of us are that sure? How many of our business plans work THAT WELL so that we can ignore the world crisis, the huge interest for the loans banks still give and go get that money?

Many people still consider a small “family business” as something you need to be ashamed of. Of course it’s better to have a huge office in the central area, a 100,000 USD car (at least) and 10 huge castles to visit each month (well, make it 12, so that we cover the entire year). But in real life this is not possible. And I would rather still live in my small apartment and run my new but not that cool car, while not having to worry that I’d lose my firm, house, life for not being able to pay for that huge loan I just took to “consolidate the business”.

I’ve written about this in a past article that had an excellent response from you, my readers: Start low or get a 200K loan? and Is a small business pathetic?

For me the answer is clear: I keep a low profile and work as much as I can. I SAVE MONEY for 2-3 years while being able to live a nice decent life and still eat well. I do make a good living and, even if not being able to wear expensive jewelry (not interested in this anyway), I do buy good clothing when needed and all I need for a nice pleasant life. This way I can still afford a meal at a restaurant from time to time, a nice perfume or a vacation. I also save money for my business and try to expand as much as I can while still keeping that budget under control.

After I get some good money in my accounts I can consider expanding. I need to be able to pay for some months upfront and also be able to cover my future employees wages for at least 6 months even if the firm won’t make ANY money then. In this business we all have good or bad months and I won’t grow my business so that I get bankrupt after 2 months. For a small firm this step is a very hard one. Since we’re also facing these economical problems we do need to be careful with the timing and all the details.

So, what’s your take on this?Are you interested in a loan for your business these days? Is it better to keep a low profile till things start going better?

Related:

• No related posts

1. You get the biggest plan possible.

I had many clients who were “shocked” to hear I won’t host their small presentation site on a dedicated server. It took me minutes to convince them it’s better to start small since I can always increase resources and they’d pay more when they’d actually need to. Yes, I am that kind of a web hosting provider. I don’t want them to jump on the biggest plan since all they’ll do is waste money on something they don’t need.

All hosting companies have many solutions for your online project. Try to chose the smallest one and make sure you can immediatelly upgrade. You can pay many months the smallest price, get a revenue maybe on your ever growing site and then, when needed be able to even pay the new hosting bills with that money. I always thought that a site that requires a bigger bill on hosting should be able to self-sustain itself when it comes to these costs.

2. You pay for 5 years upfront on a site that won’t be “alive”  in 6 months from now.

Another issue: people who try to grab some of the hosting companies offers and jump to pay for many months upfront. OK, do you really know you’ll have this site in 12 months from now? Will you renew the domain name? If you’re just testing waters, why jump to pay for 10 years when you can’t really say if the next month you’ll still be interested?

In my case for instance this “pay for 2 years upfront” might be a good idea .. I will run sites for many years to come and my 35 sites do need a place to stay. Not to mention my clients’ projects. And still I like paying every month. Becase I might not like my hosting provider the next month and I’d love not being tied up to anyone. I had bad service from some of the most renowned companies, it was good to be able to leave their servers in a hear beat.

3. You have individual plans for your sites.

The moment my network was 5 sites big it was clear to me I lose money by paying for 5 separate hosting accounts instead of a very small reseller plan. Back then my bill was something like 5 USD/site and the reseller plan was 10 or 15 USD. Yes, it’s 10 USD I saved each month, but still a saving.

Not to mention on my new reseller account I was able to give some hosting to some web design clients I had or friends and ask for a small price. In few weeks I was paying my hosting with their money, so getting on a reseller plan wasn’t that bad afterall. You can host tens of sites and be able to cover your costs pretty easily. Maybe even get a nice profit from it.

Should you have more ideas about this, please comment and share them.

Related:

• March 7, 2008 -- When FREE is NOT FREE (29)