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THE BEST BUSINESS IDEAS AND TIP AND EVERYTHING YOU NEED TO KNOW

THE BEST BUSINESS IDEAS AND TIP AND EVERYTHING YOU NEED TO KNOW

Starting a family business: Business ideas and tips

Key takeaways

You can start a variety of types of businesses as a family business, including home improvement, dropshipping or pet sitting

When starting a family business, you want to outline the management structure within your business plan, clearly detailing how the business will run and who will run it

You want to keep your business and personal lives as separate as possible, letting everyone enjoy quality family time

When starting a business, it’s essential that the business owner and key stakeholders are invested. As personal investment is what gets small businesses through tough times, starting a business with family is a way to ensure your business can weather economic and industry ups and downs.

Family-owned businesses are typically built to last and can withstand challenges that commonly impact small businesses. According to McKinsey & Company, family-owned businesses outperform non-family-owned businesses because they are adaptable and resilient. Between 2017 and 2022, family-owned businesses held a 33 percent higher economic spread than non-family-owned businesses, even through the COVID-19 pandemic and economic challenges.

Family-owned businesses are also crucial to the global economy, accounting for over 70 percent of the global GDP. They are responsible for 60 percent of global employment as well, according to McKinsey & Company.

Ready to get your family business off the ground? Here are our top small family business ideas and tips for starting a business with family.

Key insights

Family-owned businesses are a force in the US economy, according to these statistics:

 

21.7% of employer firms with less than 2 years in business were family owned (U.S. Census Bureau)

30.9% of family-owned businesses were 16 years or older, the highest percentage of businesses surveyed (U.S. Census Bureau)

42.7% of family-owned businesses employed 250-499 employees (U.S. Census Bureau)

32.8% had 10-19 employees (U.S. Census Bureau)

Between 2017 and 2022, family-owned businesses had average profits of $77.5 million compared to $66.3 million for non-family-owned businesses (McKinsey & Company)

92 percent of outperforming family-owned businesses are at least 40 percent owned by family members (McKinsey & Company)

11 family business ideas

While you can start nearly any small business with family, these ideas allow you to get started with minimal startup costs and work well for families.

1. Pet sitting or grooming

If you love pets and have space in your home or apartment, you can start a pet-sitting business. You can advertise locally through direct mailers, signs or pet-sitting websites like Rover. You can assist pet owners with walking or general care when they are at work or out of town.

You could also consider getting a pet grooming license or certificate and opening your own pet grooming business. While mobile pet grooming businesses exist, owning a grooming business often requires a brick-and-mortar location with a kennel to house the pets. Because you’ll be keeping pets in your care, some states require you to apply for a kennel license for your business as well.

2. Cleaning services

A cleaning business is an ideal startup because you need minimal supplies to get started. You can offer a range of cleaning services, including regular weekly, bi-weekly or monthly cleanings to residents or commercial businesses. Marketing yourself and having a consistent schedule can allow you to get a consistent flow of revenue.

Some services also offer one-time deep cleans, which are marketable to apartment dwellers who need to clean the apartment before they move.

3. Dropshipping

A dropshipping business allows you to source products, sell them and fulfill the product orders, all by using third parties like Amazon. You can choose what types of products you’ll sell, and then you can source products and sell them online.

You simply market the products in your online store, and when customers buy, you send the order to the supplier. Then, either the supplier or another third party will fulfill the order.

You can dropship easily on Amazon by setting up an online store, sourcing from Amazon suppliers and allowing Amazon to fulfill the orders. Shopify also offers the app DSers, which simplifies the dropshipping process for businesses.

4. Tutoring

Are you good at teaching or a whiz at certain school subjects that others struggle with? Do you love seeing children or adults learn? A tutoring business might be the perfect fit.
Many students struggle to learn in school, and parents may be busy or lack the knowledge they need to help their children succeed. Tutoring gives a child the one-on-one time they need, and you can tailor the lessons to the student.

You can perform the tutoring in your home, at the client’s home or a local restaurant or library. To turn tutoring into a full-time family business, consider opening up a learning center close to schools and market locally. You can assign different family members to tutor in different subjects based on their interests and proficiency.

5. Home improvement contractor

Some families are filled with handymen and women who know how to carry out home improvement projects. To start a family business, you’ll want to pick a niche or specific type of construction project, like roofing, landscaping or lawn care.

Then, different family members can run the business based on their skills. For example, some family members may perform the actual home improvement work, while others will stand as the face of the business, managing customer calls and booking. Home improvement businesses can take off if you live near a large city or have a wide range of cities that you work in.

6. Rental real estate

Many people get into rental real estate because it can turn into a lucrative business. If you end up with multiple properties, you’ll likely need help. Having a business with family means helping with tenants, paperwork, financial records and rental maintenance and repair.

However, this business idea takes more capital to get started since you’ll need homes, apartments or commercial buildings to rent out. If you don’t already have properties, you may also need a commercial mortgage to buy them. Then, you can make mortgage repayments from the revenue you generate from renters.

7. Marketing agency

A marketing agency is a great business idea for families with creative skills in design, writing, marketing and customer service. Marketing agencies can require little overhead if you start the business in your home.
You also have a wide pool of customers since many businesses need marketing and don’t have the time or knowledge to perform the marketing themselves.

8. Product resale business

Similar to dropshipping, you can buy products from another source and resell the items using multiple marketing channels. The main difference is that you may need to fulfill the orders yourself.

You can get started with product resale by determining what types of products you will sell. You might want to refinish furniture, resell thrifted clothing or home goods or resell other high-quality products. For furniture or home goods, you can market yourself on local social media groups or set up a booth at a consignment store. If you want to resell clothing, consider creating a Poshmark account.

If you’re looking to resell other items, you can set up an online store through your own website or through platforms like Shopify. Then, you’ll need to source wholesale products and keep them in stock, ready for selling.

9. Homemade craft business

You might want to help your kids gain experience in business and entrepreneurship by starting a homemade craft business. You’ll need to start by deciding on the exact crafts you’ll sell. If your kids are young, they may need time to develop their skills and create a high-quality craft. Then, you can sell at local farmer’s markets, craft markets and to friends and family.

10. Etsy business

If you’re skilled at creating handmade products like home decor, jewelry, wooden art, quilting and more, you can open an Etsy shop to sell your creations. Etsy allows you to expand your customer base nationwide, connecting you with customers who are already looking for the type of products you sell.

You will set up your account through Etsy, including your store and payment information. Then, you will need to create detailed product descriptions to help people find your products and think through your customer service policy, including how you’ll handle returns and replacements.

If you work hard to please customers, you can turn your Etsy shop into a 5-star business, which will help you get more customers.

11. Daycare or childcare

Another family business idea is to start a daycare or offer childcare services locally. Childcare services can include babysitting, learning programs, summer camps or nannying, all ideas that you or your kids can start with little startup costs and by marketing to neighbors, family and friends.

For a full-time childcare business, you could open a daycare. You’ll need to enlist family members as owners, teachers, front desk assistants, accountants and more. While startup costs will be significant, you can get a commercial real estate loan for the daycare building. You could also consider buying an existing daycare business, which will help you get up and running more quickly.

Since many parents need childcare in order to work, you should have steady, ongoing revenue. But consider whether childcare is a common need for parents in your area.

Tips for starting a family business

To make starting a family business successful, you’ll want to set clear expectations for each family member and play to each other’s strengths. Follow these tips for starting a family business:

Have a business plan

A business plan is a document that outlines the business’s strategy for growth and its goal metrics and revenue forecasts. It should include a summary of what the business does, the value it will bring to the market and outline the management structure of the organization. When starting a family business, every family member involved should be in agreement with the details in the business plan, including what defines success for the business.

For a family business, it’s important that the business form a recognized business structure. The business structure you choose will depend on what the family members will do within the business. Types of business entities include:

LLC: A limited liability company is a business entity offering limited legal protection between the owner’s personal assets and business assets. LLCs can be single- or multi-member LLCs.

Partnership: A partnership is a business entity in which multiple partners share the responsibility, ownership and operations of the company. For tax purposes, it is a pass-through entity, which means that partners report income on their personal tax returns.

Corporations: Shares of the company are owned by shareholders, which may be family members. The company must also hold regular shareholder meetings to report on business operations and finances. An S-corporation passes tax liability to the shareholders by having shareholders report income and losses on their personal tax returns. C-corporations must pay corporate taxes along with shareholders reporting personal taxes.

Bankrate insight

When deciding how to allocate funds during business planning, consider using extra revenue to build up a contingency fund, also known as a business emergency fund. That way, you can keep business operations running smoothly even when there are cash flow gaps or unexpected expenses.

Define roles and responsibilities

Along with a business plan, each family member will need to understand their role in the organization and the responsibilities they hold. The business plan should give a general idea of who will be in leadership. But you might define specific job responsibilities in a detailed job description and in any partnership agreements.

Set professional boundaries

While going into business with family can bring everyone together in new and exciting ways, you want to steer clear of bringing business home. Avoid talking about business around the dinner table and during other quality family activities.

Instead, make sure to schedule meetings during regular business hours to discuss operations, just as you would if you weren’t working with family members.

You also want to avoid favoring some family members over others or other employees. Work to treat family members equally as you would treat other partners or employees, and avoid giving rewards to family members who haven’t earned them.

Communicate clearly

Communication is key to a business’s success, especially when communicating your business’s current vision and strategy to employees and customers. According to PwC’s 11th Glocal Family Business Survey, 79 percent of family-owned small businesses have a clear purpose, but only 41 percent communicate their purpose externally on a regular basis.

Communicating your vision helps to build trust with everyone involved, strengthening your business and keeping employees engaged and motivated.

Bankrate insight

Like family-run businesses, communication is also important for businesses that couples run together. A couple’s close relationship is at stake if they disagree on business decisions or are unable to communicate.

Think through business financing

When funding your business idea, you want to think through your business’s plan for generating revenue. Most startup businesses need financing to get the business up and running, whether that funding comes from personal savings or a small business loan.

You can apply for business financing from traditional and online lenders. As a startup, you may have a better chance of approval when applying with online lenders, which are usually more lenient in their eligibility requirements.

If you decide to apply for financing, you’ll want to make sure the loan repayments fit into your business budget. If you can’t manage loan repayments, you may need to look into alternative sources of funding like business grants or crowdfunding.

Bankrate insight

According to the 2023 Small Business Credit Survey, 59 percent of employer firms applied for business financing in the past 12 months. Of the firms that sought alternative forms of financing, 23 percent used funds from the owner, and 8 percent used loans from family and friends.

Keep a mix of family and non-family employees

While you may be tempted to hire only family members to run the business, be careful not to overlook non-family member employees that would add value. Your family members will all have strengths and weaknesses, so hiring outside the family can ensure you have a well-rounded business.

Draw up a succession plan

If you want to continue the family business after a key stakeholder leaves, you’ll need a plan to train other family members or leaders to fill the vacancy. You may want to formalize the succession plan in a written document.

A good succession plan will outline the key people and competencies that leaders will need to run the business. It will also identify any challenges the business may face in the next few years and how to overcome them.

Bottom line

Starting a business with family is similar to starting a business on your own — except that you already have a strong relationship with the people going into business with you. You’ll want to outline the key responsibilities that each family member will have when working with you in the business. You can outline these in the business plan or job description.

But while working with family can strengthen your business, you want to make sure to keep business dealings outside of your personal lives.

You also want to take care to preserve relationships when the business owner has to make tough business decisions. You can avoid conflict with clear communication and defined roles for each family member within the organization.

Frequently asked questions

You can start a family business by coming up with a business idea, forming the business structure like an LLC or partnership and enlisting family members to help you run the business.

Family dynamics can lead to a strong business since family members tend to know each other’s strengths and weaknesses. The downside is that you can strain personal relationships if the business isn’t going well or if you need to make a tough business decision involving one family member.

A family business is any business where family members run the business together or where a business owner employs family members.

 

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