How To Start a Family Business (With Expert Tips for Success)

Starting a business with your family is a high-stakes venture. Get it right, and you can build an income stream for your loved ones and a lasting legacy. Get it wrong, and you risk more than just the company—you risk family harmony.

So, how do you set your family venture up for success? Below, you’ll find insights from seasoned entrepreneurs, including Dave Carlson, who, along with his wife and two daughters, transformed a family hobby into the global brand Wildflower Cases.

Their journey from hobby to business offers a powerful blueprint for other families looking to build something together. We’ll walk you through the essential steps for starting your own family enterprise, featuring hard-won advice and lessons from Dave and other founders.

What is a family business?

A family business is any company in which two or more family members are involved. Most ownership or control is within the family. The key characteristic is that business decisions and future strategy are heavily influenced by family relationships, with a common goal of creating wealth and a legacy to pass on to the next generation.

These family-owned businesses are the backbone of the global economy. Collectively, they contribute more than 70% of global gross domestic product (GDP) and are responsible for 60% of the world’s employment. 

While most family-owned businesses have fewer than 500 employees, some have grown into multigenerational giants. Two prime examples are Ford and Walmart. At Ford, the founder’s family maintains 40% of the voting power through special Class B shares, ensuring their control. At Walmart, the Walton family retains majority ownership by holding nearly half of the company’s stock. 

How to start a family business

1. Get universal buy-in from all family members
2. Define roles by strength, not seniority
3. Formalize the business
4. Secure funding

Starting a family business requires a focus on communication, family relationships, and leadership. After you’re done brainstorming family business ideas, these steps will help you put your plan in motion, focusing on the challenges and opportunities families face.

1. Get universal buy-in from all family members

Before creating a logo or filing paperwork, the most crucial first step in starting a business is to get buy-in from everyone who will be involved. 

That pivotal moment for Wildflower Cases’ Carlson family came in 2012. Dave’s wife, Michelle, had been making personalized phone cases for their daughters, Devon and Sydney. During a chance encounter at a restaurant in Los Angeles, Miley Cyrus spotted one of the cases and enthusiastically told them they should start a business and sell them. Her endorsement, which she followed up by tweeting a photo of the case to her millions of followers, created an instant viral opportunity. 

Dave, with his entrepreneurial background, recognized the moment—but immediately turned it into a family decision. “I wanted my daughters to decide for us,” he explains. “I was like, ’Let me explain to you guys what just happened,’ because they were 15 and 17 years old. I said, ’Look, this is the opportunity, and I want you to decide what to do.’” 

Dave also stresses that this step is about giving loved ones a clear out. “My advice is to give your family members and spouse the opportunity to say no if they don’t want that lifestyle, because I would not recommend entrepreneurship for everybody,” he says. It’s critical to discuss everyone’s personal aversion to risk and what boundaries you need to protect family harmony. It’s a chance to be honest about the potential pitfalls, such as financial uncertainty, long hours, and a lack of separation between work and home.

2. Define roles by strength, not seniority

Once everyone is on board, you must define roles. This can be a minefield for different family members, so it’s critical to determine how each person can best contribute. The temptation may be to assign roles based on seniority, like dad or mom as the default leaders, but Dave advises a different approach: understand each person’s unique strengths.

“I think you need to understand what each of the family members’ strengths and weaknesses are, and make sure you put them in the roles where they could excel,” he says on Shopify Masters. At Wildflower Cases, Michelle leads the creative and product design. Daughters Devon and Sydney, as the faces of the brand, drive the marketing, social media, and trendsetting collaborations. Dave, with his business background, handled the operations, strategy, and ecommerce tech stack, especially in the crucial early days of building the website and scaling the company.

Amit Mahtani, who owns and operates Bagels on Greene with his parents, agrees. His family jumped headfirst into their business, and from day one, clear boundaries were essential.

On an episode of the Shopify Masters podcast, he explains their structure, which is a perfect example of dividing roles by strength and assigning clear responsibilities: “My mom handles the customer complaints. She’s the front of the store. My dad is the chef in the store, so he runs the kitchen in the back. And I run the offsite stuff. So everybody has their own distinct jobs, and we all manage it individually.”

Amit warns that without this separation of responsibilities, a family business can fail. “It’s not really one big family business and all three heads are making decisions,” he says. “You can’t have that. There have to be individuals taking care of their own sections.”

This prevents future friction. “If you put them in the wrong role, that’s when families butt heads,” Dave warns. “You could avoid a lot of internal family friction if everyone shares what they’re passionate about.”

In other words, it’s not just about aligning roles with skill, but also with personal interest. Forcing a family member into a position they don’t enjoy—even if they’re technically good at it—is a recipe for resentment and conflict.

3. Formalize the business

This is the critical step where your idea becomes an official, legal entity. It’s where you move from a family project to a family business. Rushing this stage can lead to major legal and financial friction down the road. Consult professionals first, such as an attorney and/or accountant, who will discuss the best legal structures for your business. The limited liability company (LLC) structure is a common choice for family-owned businesses, as its primary benefit is protecting the owners’ personal assets from business debts. 

You’ll also want to create an operating agreement, which is an important legal document outlining the entire management structure and business procedures. The document forces you to answer the tough questions before they become problems.

An operating agreement should clearly define:

• The percentage of ownership for each family member 

• Voting rights and decision-making power 

• Responsibilities of each member 

• A succession plan or buy-sell agreement that addresses the transfer of ownership if a family member wants to leave, passes away, or gets divorced

Next, it’s time to establish and protect your brand. Dave’s first move was to reserve the name Wildflower Cases on everything, including Instagram and Tumblr, along with the domain name. You should also consider filing for a trademark with the US Patent and Trademark Office to legally protect your brand name, logo, and slogan. 

4. Secure funding

Many family businesses are self-funded, and Wildflower Cases was no different. “It was our family money that I used to start the business,” Dave says. “We didn’t need that much, though, but we did use our family savings.”

Soon after, they switched to a business credit card to fund inventory. However, they did face one cash flow crunch where they had to borrow from a family member—an experience Dave does not recommend. “Borrowing from family, for me, gives me anxiety, because I don’t want to ever miss a payment or not be able to pay them back,” he says. “Family, friction, and money … that’s not good.”

His advice is to seek outside funds first, even if it seems harder. “I’d rather borrow money from a bank, from a credit card. If something happens to the business and you can’t pay it back, at least your family’s intact. Emotionally, it’s a much safer route to borrow from institutions if you can.”

5. Set clear boundaries for business vs. family time

When your business partners are also the people you eat dinner with, maintaining a work-life balance is arguably the biggest challenge. Dave was aware he had to be the one individual to manage this.

To protect their personal life and culture, the family set clear rules:

• Schedule business talk. Set aside a block of time, whether that’s once a day or once a week to have a business meeting to check in with everyone.

• Label business intrusions. Dave and his family have a group chat, which he says is mostly personal, with business chat sometimes creeping in. “In the family chat, if I do have something to say about our business, I actually put ‘business topic’ in all caps, and then I’ll add what I’m going to say. So at least they know, ‘OK, pause, family stuff. Dad’s got some business topic stuff.’”

• Ask for permission. When mixing personal and business, you also have to be OK with the fact that others may not be willing or able to shift from one mindset to another. “You have to be flexible, and if they say no, you have to be OK with that,” Dave says, noting that the support must go both ways.

Tips for running a successful family business

• Practice patience and let the next generation fail
• Make compromise your default mode
• Involve all family members in the hiring process

Launching is one thing; staying successful and happy for years is another. Here are Dave’s top tips for long-term success.

Practice patience and let the next generation fail

For parents working with their children, the temptation to micromanage is immense, but resisting that urge is crucial for their growth. Dave identifies patience as the biggest challenge he and his wife faced. The key to growth, he learned, was letting go. And that trust is what allowed his daughters to eventually take over all marketing and brand direction for the company.

Building that trust wasn’t easy, and Dave explains it was a long, gradual process of letting go, not a single risky decision. He describes the challenge of overcoming the temptation to micromanage as a parent: “At first, it was like, ‘No, you’re gonna do it this way because I know what I’m talking about.’ There was some good training in that. But as time went on, they had their ideas, and they had their processes to get things done. We slowly would give them more range to take more chances or follow through on their ideas. That was probably a three-year process of letting go,” he says. 

“You have to give your children the opportunity to fail,” he adds. “If it’s something they’re passionate about, you’ve got to just let them try it. These young minds come in, and they look at business from a different perspective. That should be an opportunity to just introduce new ideas.”

Make compromise your default mode

Disagreements are inevitable, but in a family business, they can feel personal. The solution, Dave says, is to master the art of compromise. He shared an example of a recent disagreement: “There were raised voices, and there was friction,” he admits. “I think the way we dealt with it was just explaining to each other, ‘Look, we can disagree with your ideas, and we can have a calm discussion about why.’”

The goal for leaders in a family business is to remove the emotion and listen. “Try to just sit calmly and listen to the other side,” he advises. “Compromise amongst family members is so important. When one family member is stubborn and is like, ‘No, my way or the highway,’ that’s going to be tough. Over time, people will just not like working with you.”

Amit shares this perspective, noting that the stakes are different when it comes to conflict with multiple family members. “There are fights that are going to come up along the way. You have to deal with them,” he says. “There’s nothing stronger than family that’s going to keep it together. If you have a business partner, within a whim you’re broken up and everything is gone. But when it comes to family, you can’t just turn around and say, ’Hey Dad, I’m never going to talk to you again.’ It doesn’t work like that. So you work through whatever problems you have.”

Involve all family members in the hiring process

When it’s time to bring non-family members onto the team, a collaborative hiring process is critical. A bad hire doesn’t just disrupt workflow; it disrupts the family culture. Dave’s solution is to make hiring a group decision.

“I would say all of us interview every applicant. Separately, and then together. Because we’re all going to see a different perspective,” he says. “If one person’s in charge of hiring, and then someone in your family’s like, ’Well, I don’t really like that, I can’t work with this person,’ then all of a sudden you’ve got to let them go. I think every family member should go through their entire hiring process from beginning to end.”

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