How to Do Business With Friends and Family
I recently discovered that in the Serbian traditional culture a brother is forbidden to loan money to his brethren.
In the Jewish tradition, similarly, it is recommended never to loan money to a friend or family. You should instead give them a present for as much as you can afford, even if it is less than what they need.
What is going on? And why are family businesses chock full of intrigue, fights, and hard feelings, and sometimes even lead to tragedies?
I finally understood it by experiencing in my own skin what happens when the Serbian or Jewish cultural recommendations are ignored when I got involved in business endeavors with my brother in law.
Why not loan to family or friends, and instead give them as big a present as you can afford? Because when you give a gift you let go of your expectations for prompt reciprocity.
In comparison, when you loan money you look over the shoulder of the person you loaned money to; if they spend money on anything above absolute necessities you will resent it and hold it against them, and continue resenting them having a normal life until they pay you what they owe you.
But this resentment is a two-way street, not a one-way street. They will resent you for their dependence on you. “Dependency breeds contempt” a psychiatrist friend once told me.There is even a Chinese expression that says: “Why do you resent me so much? I did not help you!”
If you loan your brother money and he does not pay you back for whatever reason, you will resent it, he will resent you, and the brotherhood will dissolve.
In the Jewish tradition a righteous person gives tzedakah, an anonymous donation. That means he does not expect anything back and the one who receives the help does not know whom to resent…so it is for the benefit of the benefactor to be anonymous.
Why are family partnerships such a mess? More so than non-family businesses? Because you do not think the details through to the end when negotiating. Because you do not have arms-length relations, or construct agreements with lawyers like you would with a non-family member.
When going into business with a brother or sister or cousin you assume “We can work out anything. We are family.” Nothing is nailed down and necessary details are left out. And as we all know the devil is in the details. When the devil does eventually appear there is no more intense fight, to death, than among brothers and sisters.
The closer is the person to you the more careful you have to be in drawing up agreement papers.
Why don’t we do that? Because we are family. It feels uncomfortable to negotiate and argue with family. But what we don’t do when we begin the journey we will have to do when we get stuck somewhere along the way. We will negotiate later, and fight and destroy the family later….
There is no free lunch and it seems we need to do all your divorcing before you get married.
Dr. Ichak Kalderon Adizes