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When Sister Is Your Business Partner

As sisters growing up in Rochester, Mich., Brenda and Mary Maher shared a bedroom and a Hasbro (HAS) Easy-Bake oven. As college students, they shared a passion for baking elaborately decorated cakes. And since 2000, the Maher sisters, now 37 and 39 respectively, have shared a thriving Chicago-based business, Cakegirls, which sells some $300,000 worth of specialty cakes a year. Though they have perfected their ability to craft scale replicas of such cultural artifacts as Wrigley Field and the Sony (SNE) PlayStation—sold to celebrity clients, including Bono and Jim Carrey—and they appear on WE tv's Amazing Wedding Cakes and the Food Network's Last Cake Standing, their biggest business accomplishment to date is their nine-year-old partnership.

While every partnership is fraught with risk, those between siblings are even dicier because of the preexisting personal dynamic that almost always characterizes ties between close family members. Bill Alexander, a professor at the Wharton School who specializes in family businesses, explains that "lifelong relationships unconsciously get carried into these partnerships." At the same time, defining business roles and putting them into practice is tricky. And resolving disagreements—or trying to—can be tinged by decades-old family patterns. Wayne Rivers, president of Family Business Institute in Raleigh, N.C., an advisory firm for family-owned companies, says: "Siblings are more hesitant to sign documents. Siblings often go in with blind trust; you're my sister I trust you"—often thinking family ties will bind their business relationship.

According to the Family Firm Institute, a research group in Boston, only 30% of family-owned businesses make it to the second generation, 10% to the third generation, and 3% to the fourth. While Rivers notes that there are no reliable statistics on the number of business partnerships comprised of siblings, he says it is rising among the businesses he works with. "Ten years ago, 25% of family businesses were partnerships. I would say [the number] is substantially larger today."

After three years of toil, a break

Unlike their genre-busting cakes, the Mahers started off cautiously, holding down day jobs while they figured out their fledgling business concept. In 1998, Brenda moved to Chicago by herself and worked as an administrative assistant for a staffing company with the goal of gaining business skills and locating a viable market. "I don't like to be one-dimensional. It allowed me to get my feet wet in Chicago and learn a variety of skills," she says. By the time Mary came to Chicago (with a full set of professional baking and kitchen equipment) two years later—she had been working at an upscale Detroit-area bakery&—a sense of the business and the roles they would play had emerged. Brenda took the lead role in business and Mary focused on the creative side of cake baking and decorating. The Cakegirls got the word out themselves, telling friends and co-workers about their "night job" in the kitchen.

In the beginning, the sisters lived and worked in the same apartment. They gave prospective customers the impression they had a much bigger operation by using voice mail and posting their catalog online. They also opened a business bank account with $500 and deposited any money they earned from baking into it. Within three years, the Mahers had saved $15,000 from sales, having continued to survived on the income from their day jobs.

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