If you run a small or medium sized business, do you employ any family members? Currently, more than a fifth of small business surveyed (21%) do so. What’s more interesting is that a staggering 94% of SMEs employing family members felt that their business had benefited as a result.
I’ve always believed hiring a family member can be a double-edged sword. Mainly, what if they start taking advantage of your relationship and not doing what their job entails? Your Uncle Bobby might think that because he took you to all those ball games growing up, it’s payback time, and he shouldn’t have to work as hard as other employees. On the flip side, there’s no better joy than to hire a family member who is need of employment.
LET’S TALK FAMILY
Public liability insurance provider, Hiscox, carried out a survey of 1,000 UK business owners on the subject of family employment to ascertain the above results. Interestingly, 43% of those currently employing family members said it was due to the recent recession. With millions of people around the world losing their jobs over the past couple of years, there’s a high likelihood that you might be related to one of them.
A lot of SMEs have also struggled due to happenings in the financial world, and employing a family member for perhaps a discount to market provides a mutually beneficial solution to both parties. For hiring companies, the recession has created an increased supply of skilled people with experience looking for work. If one of those people so happens to be a family member, then all the better.
The Hiscox survey found that 43% of those questioned felt that the biggest risk was keeping family and work life separate. A further 25% were worried about family politics. While succession of business ownership is generally seen as being a big issue, only 8% felt that this was a risk. As I discussed above, you might also end up hiring relatives who feel entitled, and end up not doing what they are supposed to do. When it comes time to do their review, you probably won’t give it to them straight either.
While this shows that there are definitely issues to consider when employing a family member, the fact that you already know them means you are more likely to be able to easily identify the relevant risks. Plus, your pre-existing shared interests mean that it’s in both your interests to make it work. If your relative has been out of work for a while, s/he may feel so indebted to you for hiring them that they will work far beyond what is expected of them to show their gratitude. Not only that, they may accept less money because they just want to be productive and have disaster insurance.
The majority of SMEs in this study who employ family members say it’s a good thing to do. I have to agree. When it comes to a small business, you want to work with people you can trust the most. There is nobody I trust more than my immediate family.
I got to admit, one of the reasons why I plan to keep on running Financial Samurai for the next 10-20 years is because I want to give my children options. As Asian-Americans, they may be discriminated against at work and when applying for college. I want to teach them how an online business works so that they can work for the family business if they want.
I made it to my 10-year business anniversary in 2019, and I plan to keep running FS until I know my kids don’t want to work for FS or have found their own calling.
Start your own business: If you feel you’re not getting paid what you’re worth and want to boost your income, start your own business online on the side! Here’s my step-by-step tutorial guide on how you can launch a website like mine in under 30 minutes. I started my business and have hired my father and sister to do freelancer work for me. It used to cost a fortune and a lot of employees to start your business. Now you can start it for next to nothing with a hosting company like Bluehost for under $3/month and they’ll give you a free domain for a year to boot.
Brand yourself online, connect with like-minded people, find new consulting gigs, and potentially make a good amount of income online one day by selling your product or recommending other great products. Not a day goes by where I’m not thankful for starting Financial Samurai in 2009.
Updated for 2020 and beyond.