Whether you start a business with your BFF, or call your dad "boss", working with friends and relatives often walks the fine line between great times and disaster. We hear from our panel of entrepreneurs if they think it's worth turning your business into a family affair.

With personal accounts about what happens when you combine personal and work life, we talk about freeloading relatives, employing your kids, and that time Uncle Don saved the day.

So, when exactly should you put your cousin on the payroll?

The old adage about not working with children or animals can easily be extended to friends and family – as a quick Google search reveals. For any employer, dealing with problems at work is tricky enough, but potentially, it’s a whole new level of difficulty when the issue is with your best friend – or your sibling.

Potentially. That’s the operative word. Is bringing your nearest and dearest on board really a recipe for instant disaster? Or can everyone, y’know, just get along?

It’s all relative…

David Patrick had no doubts that he wanted to bring his children on board in his skateboard wheel business, Shark Wheel. “But I didn't want them feeling it was owed to them, or it was something that was expected and coming. They literally need to earn their way in.” With a business-first focus, even after proving their acumen in roles (ranging from fast food to car dealerships), David is still adamant that he’ll only hire his family members when he’s convinced they’re the right fit for the role.

It’s a different situation for Danny Catullo. His butcher business has been in his family for generations. His previous bosses have all been family members and it was a given that when he took up the reins, many of his employees would also be relatives. But he emphasised the importance of consistency: “It didn't matter if you were my aunt, my uncle, my cousin, my brother – if you worked for me, I wanted to treat you the same way that I would other employees that worked for me.”

…except when it’s not

The approach can vary even more when the potential employees are more distant relatives – or friends. “I can't hire friends,” says Aqila Augusta. “At this point there is a no friend policy.” Having previously done just that for her hair stimulant business Edge Entity, she’s found it a hard – but necessary – call to make. “Friends don’t want you telling them what to do. The relationship is not blended: I'm not your friend, I'm your boss. And then outside of work, you're going to hate me.”

But that’s not the case for Diana Ganz, who runs her wedding attire business with a longtime best friend. “It’s a dream, it’s dreamland,” she enthuses. Her partner Jeanne agrees. “It's awesome. I never dreamed that I would have the chance to work with somebody, not only so smart but, but a close friend. I don't think you can really, truly feel comfortable in a startup working as many hours as you do if you don't have a very close relationship.” Diana laughs: “We are more connected than we are to our husbands!”

Difficult conversations

Which isn’t to say that it’s all plain sailing. Even the closest of friends – or family members – can have differences of opinion. “I would say every six months, we have a moment where we have to put ourselves back in check,” says Diana. “One of the biggest problems we have is we don't want to upset one another. Those moments are painful, and I know Jeanne and I both lose sleep over it – those are tough conversations to have.” Painful, but necessary. Both Diana and Jeanne recognize that those moments of candour are an important part of any relationship.

Danny has also had his share of those tricky conversations, but from a different angle. When he looked to introduce new business ideas and approaches, he had to win over more than just the family. “I had to sell them on these ideas, and also to the employees that worked for my dad and my uncle – to show them that I not only had great ideas, but I was willing to work hard to implement them.”

A sense of entitlement

But not everybody shares Danny’s mindset about proving value. One of the pitfalls of hiring friends or family is that it can often come with a side order of entitlement. “Honestly, family members feel entitled,” says Aqila. “These people are lazy. They think that you're just supposed to just give them money and then they're not supposed to do anything.”

Harsh words, but David agrees: there’s clearly no room for slackers at Shark Wheel. David has no problem with hiring people above his children. “They don't care because they know, ‘Hey, one day that'll be me. When I'm older and I deserve that job, I'll get it.’ I knew that I didn't want entitled children."

Sweating the bad stuff

This might on the surface seem like a hard stance to take but ultimately, if you’re running a business – particularly a startup – there’s no room for passengers. Because the other thing to consider is that if things go wrong, they can go very wrong. The repercussions of firing or falling out with a friend or family member are likely to cut deeper than a one-star review on Glassdoor.

And it’s this sort of difficulty that has led to Aqila’s policy of not hiring friends. A falling out with a friend who was working for her did irreparable damage to their working relationship, to the point where Aqila found herself in the unenviable position of firing her. “And it wasn't me, it was her. So now I've lost an employee because of the issue with our friendship. I just don't do it anymore.”

David has found that hiring distant relatives has led to problems when he’s had to let them go. “So, you know, you're not invited to Thanksgiving anymore, or you're not invited to Christmas anymore, all that stuff. We all know that's the downside to hiring family. So, I've hired my direct kids 'cause I can fire them and they still show up for Thanksgiving and Christmas!”

Growing the family

David recalled an occasion where he had to testify against an employee who had embezzled from him, resulting in them going to jail for three years (“That’s a difficult conversation, I guess”). It’s hard to imagine just how much more difficult that situation would be if the person in question was a close friend or a close family member.

But the general feeling is that it’s not only possible to hire friends and family, but it can also be a good way to grow a business; as long as the checks, measures and boundaries are put in place – and adhered to. Just, in fact, like any other employee. “Everybody knows what the heck they're doing there,” continues David. “They know their role. And we've never had a major problem.”

And there are times when everything turns on its head and it’s the business that ends up growing the family. When Diana and Jeanne relocated from New York to Chicago, they had thousands of stock items to move and planned to hire a truck and take it in shifts driving. When the truck turned out to be so big that it wouldn’t fit under some bridges (“Jeanne’s feet literally couldn’t touch the pedals!”), Jeanne’s uncle Don flew out to the rescue… and the rest, as they say, is history.

“Once we got settled here in Chicago and we needed to just take all of our inventory to a fulfillment center, he came again and drove the truck,” says Diana. “And the fun fact is that my mom and Jeanne's uncle, Don, have started dating.”

“So, we’re now friends and family,” says Jeanne. “What does that make us? Second cousins? I don’t know!”