Is doing business ever a good idea with your family members? 

A couple of days ago, I was approached by a family member with a business proposal.  After doing a lot of analysis and calculations (forecasting worse and best case scenarios), I determined that, regardless of the rate of return, I’d still make money – given a commitment of at least 3 years.

Then…came the negotiation part.  I – being the business/investment person I am – want to make as much money as possible with as little investment as possible (within sensibility parameters, of course).  He – being the non-business/investment person he is – is smart enough to also want as much money as he can get and, at the same time, recapture his investments.  And, it’s all rational…but I want a good deal.  Darn it.

Now…emotions are being tossed around – when all I ever wanted was honesty.  Upfront honesty.  I’ve even told them to go and write a list of everything they want regardless of what I want, told them I’d do the same, and we can get together later to compromise.  They may be working on a list right now…

The situation hasn’t finalized yet, and I’m sure it will all turn out well.  But…I’m naive to not reflect on the fear that this could all turn out very ugly (and I’m not talking about bad rates of return).  So…I’m preparing myself for a worser-than-worst case scenario; will I be able to just say it is all just money then?  Merely a bad investment? (I better do the numbers on this.)

(I guess in thinking this and still willingly committing to the deal would mean I’ve already decided that it can turn out bad, but I won’t let it affect my relationships.)

What situations/factors determine whether or not you should go forward with a deal?