Smart Strategies for Couples Running a Business Together

Gail Nott was a marketing consultant and her husband, Cory, a technology consultant, when they joined forces in 2018 to help other consulting and coaching businesses grow. Married since 2005, Gail, 46, and Cory, 53, of Nicasio, Calif., struggled at first. “I had all these initiatives in mind, how we were going to market and grow our business, and I didn’t feel like he was okay with me,” she says. “We weren’t doing anything.”

Six months later, a friend suggested the obvious solution: a business coach to help them work together as spouses. They spent a few weekends working with the coach and followed monthly calls for the following year. Now, nearly four years later, their online business, Take Wing Coaching, is doing well.

Starting a business with a spouse requires balancing two partnerships, marriage and the business. All that togetherness can be exhilarating and exhausting, with the financial stakes ever higher. There are approximately 5 million family businesses in the United States, according to the Census Bureau. In a 2019 Census Bureau survey with a response rate of about 50%, 22% were jointly owned and operated by spouses, nearly 8% jointly owned but primarily operated by the husband, and 3% jointly owned but primarily operated by women.

Anecdotally, financial planners and wealth advisers say they’re seeing more and more couples choosing to work together, which the pandemic may have spurred. “People have spent a lot of time thinking about what they want to do. They’re looking to escape the old responsibilities of putting on a suit or getting on a plane,” says EP co-founder and CEO Brian Parker. Wealth Advisors in Torrance, California. Plus, he says, the pandemic has made everyone aware that life is short.

A shared vision

No business, especially one with a marriage on the line, should start without first working out the financial and legal details with a CPA or attorney. At a minimum, you’ll want to discuss how to set up the business (see “4 Ways to Structure Your Business” below), but couples also need to consider their long-term vision for the business. One of the first things Parker looks for when advising couples about starting a business is whether they have the same expectations. How do they envision the company growing? Do they want to attract investors, hire employees or start a franchise? “A couple I work with who are still fine-tuning their roles realized they were willing to downsize so they wouldn’t have to hire people,” he says. “They said, ‘We’re okay with making less money and doing it ourselves. “”

Gregory Cole, 58, and Michael Perris, 60, of Bernardsville, NJ, who have been together since 1995, ran a successful luxury goods marketing business for 20 years before the pandemic shuttered the business. Last year, they launched a fragrance company, The Bubble Collection, building on lessons learned working together on their first startup. They recognized that they needed recreation and time apart from each other. “We really had to cultivate our personalities outside of our role as a business partner,” says Perris.

They also understood how important it was to adapt to their different working styles. So this time, they consulted with a lawyer, and the couple plan to formalize their specific business titles and roles in writing, something they wish they had done for their last business, Cole says. They also defined what would happen if one of them left the company. “It’s not just a hobby,” says Perris. Clear contracts and boundaries “are really important for a healthy dynamic between partners in life and business.”

Know the strengths and weaknesses of you and your partner, says Kyle Whipple, a partner at Custom Wealth Solutions in Plymouth, Michigan, who has advised couples on joint ventures. If neither of you is good at, say, accounting, “then you have to hire a third party.”

On board with the risks

Starting a business is always random, and couples have to accept the risks. “I start with a worst-case scenario, Parker says. For example, if you are taking money from your retirement or investment portfolios, how much longer will you have to work if the business is less profitable than expected? Will the house have to be sold? Both spouses need to understand what is at stake financially and how they define success. If the two are okay with breaking even or losing a little money, it can still be a successful business, he adds. “There’s nothing wrong with owning a winery because you love making wine. You just need to have a clear idea of ​​what’s in store.”

For Kasey Thompson-Agee, 50, and her husband, Cleveland Agee, 51, the motivation was twofold: to make money and create the kind of restaurant they wanted but couldn’t find in their town. native of Big Rapids, Michigan. After giving it away After much thought, Thompson-Agee, former director of global menu strategy at McDonald’s and currently a business professor at Ferris State University, and her husband, a construction company owner, decided to opened a casual restaurant that they hoped would become a community center. In May 2021, Fatty C’s Dog House, which sells hot dogs with a plethora of different toppings, opened.

It hasn’t been easy, especially during the pandemic. They liquidated most of their savings to start the restaurant rather than take out loans and are now looking for investors. “When the pressure mounts, you wonder why did you make this decision, why didn’t you consult with me,” she says, adding that we’ve had “dozens of conversations.” She tends to be optimistic, her husband more realistic, but they’ve learned not to “overdo it,” says Thompson-Agee. Most restaurants aren’t profitable the first year, but she says they’ve hit their target for January and are building a clientele. “With everything we’ve learned, I wouldn’t choose anyone else to do this with,” she says.

Sometimes, however, couples are faced with a difficult choice: either the business partnership disappears, or the marriage will disappear. Take Ravi Davda, 33, who worked with his wife for three years at their health and fitness startup. He liked being his own boss, but his wife Sheena, 33, didn’t like being self-employed. She wanted to go to work and disconnect at home, while Davda immersed herself in the business in both places. “I felt like I had to deal with her a lot, which wasn’t what I wanted to do,” he says. “It didn’t work for us.” After six months of effort, they decided that Davda would continue to run the England-based company while his wife found work as a recruitment manager. Three years later, they are no longer business partners, but they are still married.

For some couples, running a business together strengthens a marriage. Jillian Cohan Martin, 44, and Jeffrey Martin, 47, of Portland, Oregon, are both former journalists who have been married for 13 years. In 2018, they launched Clarity Content, a writing, editing and media outreach company. They also produce a podcast, “Managing Partners,” about couples working together. “People think it’s a huge risk to mix work, life and love,” when it’s the opposite, says Cohan Martin. “It actually allows you to take more risks because you have fundamental trust and shared values.”

4 ways to structure your business

Individual company. With this most common type of business structure, you are automatically a sole proprietorship if you do not register as another type of business. Your business and personal assets are not separated, you cannot sell stocks, and you file your profits and losses on Schedule C of your personal income tax.

Sole proprietorships are a good choice for low-risk businesses and those testing their business ideas. But as the name suggests, only one person can own it; a spouse or domestic partner can be an employee.

Qualified joint venture. It’s the best option when both spouses want to own, says Cindy Goldstein, a New York-based tax attorney and CPA, at least in the early stages. The couple files taxes jointly but completes separate Schedule Cs.

Limited liability company. An LLC is a legal entity. You can file taxes as a sole proprietor and LLC, and depending on state community property laws, you may be able to file taxes both as a qualified joint venture and as an LLC. The main advantage of an LLC is that your personal assets are protected if the business goes bankrupt or is sued.

S corporation. Also a legal entity, an S-corp has more rigid requirements and is generally used for larger companies with shareholders.

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