Any business is most efficient when qualified people are employed. Hiring the wrong person is an expensive mistake. But he's my nephew. Consider special classes or re-training to bring a family member up to her full potential. As a last resort, change their status to non-working partners.
Most advisors recognize that family issues influence business decisions.
Whether you want to expand your enterprise onto the Internet, or fire that nephew you had to hire, all partners may not agree. Make a formal plan for resolving differences, and stick to it. Have a solution in place before problems happen. Most small business owners spend their time on today's problems, with little thought for the future. Many people assume their spouses or children could sell the operation.