Two relatives as partners

I'm trying to get started with my business idea, but I'm looking for at least one partner. I've found one, who I know vaguely, but he wants his brother in too.

Although both seem competent enough, I'm a bit reluctant to work in a three way split scenario with two relatives possibly teaming up against me. It is a worst case scenario of course, goal is to get the business running, not to fight.

How do you feel about such a scenario?

The only thing worse than a friend for a partner is a relative. I was warned against it and ignored the advice. I paid dearly. I would never do it again.

You should be evaluating each partner on their own merits. It's great if your partner can find you another who is worthy, but you should determine on your own whether or not you want the third wheel.

This should also be a warning to you about working with this partner. You have not yet committed to him, and he's making possibly unreasonable demands of the business.

In regard to control, you don't have to split the company equally between the partners. It's your company alone initially, and then you make an offer to the partner. You can offer 10%. Or 50%. Or 90%. It's up to you to make the offer, and up to your potential partner to decide whether or not to accept it.

I have had personal experience with this. In fact, continue to do so as my own relative is currently 'dead wood' in a startup I am trying to launch.

My advice on this would be simply don't do it. It helps not having your own relatives in so you do not lose a relationship and it also helps avoid any nasty situation where a relationship between the other partners does not backfire onto you. The existence of a familial relationship tends to sometimes also portray the wrong impression - that complacency is ok, which it is NOT in a startup serious about succeeding.

I was warned about the issues that arise when you do business with family and friends early on as well. I wrote a pretty detailed blog post about this that covers 5 major concerns that you should take into account when doing business with friends or family:

• Business Plan Development: Never fall into the trap of getting started
  with ‘just’ a business idea. Sure you
  have a greater level of trust with
  your business partner but that does
  not mean you would exclude putting
  down on paper what it is that you
  plan on achieving through this
  business. The process of putting down
  on paper what your idea is, clarifies
  it, identifies key areas which you
  need to work on and possible pitfalls
  you may face. This is a step which
  needs to be taken before you start
  any venture.
• Commitment Levels: With a business plan in place you will now
  be able to judge with greater
  certainty how much money, time and
  effort is going to be required by the
  business. You need to put down clear
  parameters at this stage as to what
  each partner is supposed to do. This
  level of commitment needs to be
  clarified from the start or you will
  have an unbalanced partnership which
  leads to a multitude of problems
  further down the line.
• Candor: Establish a culture where candour needs to be an integral part
  of the venture. The worst thing you
  can do for yourself and your business
  would be to keep all the things you
  want to say to yourself. This will
  lead to frustration, under
  performance and morale issues which
  can jeopardize the success of the
  business. A culture where you can be
  open, state your opinions and be
  comfortable will help you form a
  considerable competitive advantage
  and will enable your company to make
  difficult decisions with a lot more
  ease.
• Noise Levels: When you set to do business with friends/family you need
  to keep external noise levels under
  strict controls. Noise levels refers
  to the interference in the business
  by members of your family or friends.
  When we divulge too much information
  outside the core group it ultimately
  comes back to the core group in a
  completely changed form. This could
  lead to several problems between
  partners, frustrate the team and
  affect the overall morale.
• Equity Splits: This is an issue which is at the core of most problems
  which are faced by all companies but
  more so in businesses where friends
  and family are involved. We tend to
  be a lot more generous just because a
  business partner is a cousin, friend
  or relative. You need to correctly
  assess what the partners contribution
  will be and then use a simple model
  to figure out how much the partners
  stake is actually worth.

To read more about each point please go to 5 Steps to Follow When Doing Business with Family or Friends.

The fact that you are not comfortable right now and you are asking for advice should be enough reason for you not to do this. Follow your gut.