There isn't much more to add to your questions; you pretty much covered every single issue that arise when working with friends and family. And maybe the conclusion is: When you'll do, expect to be a "giver" and deal with it or find a way to politely refuse or make it your rule to never mix those up together.
When you do work, there's 4 currencies that you often get offered:
Currencies are what's being exchanged for your services and why you do work for someone. You may get more than one for each project and some people can only offer you 1-2 of them, not always the ones you need/want.
- Exchange of skills
People often have hard time separating emotions from business, that's probably why the friend/family business relationships are always very hard to deal with. And unlike working with a partner who has the same goals and self-interest as you, you can't really "educate" your friends/family because it will affect other parts of the personal relationship; they have their own self-interest. So in a way, refusing to work for friends and family is respectful of that relationship; you choose what is your priority. You can use that reason to refuse work, they should respect your choice; if they don't there's nothing you can do about it, it's a matter of maturity. In friendship and family projects, I think the main payment you should get is "fun" (ideally money too) or at least you need to learn something from the work you did. If they add guilt (or you feel guilt) to the recipe then it's not fun anymore. See why you feel this way, it could also come from your conditioning or perceptions. Doing a business project with a friend/family member is a bit like becoming his/her roomate and that can be a way for you to think about all this by using this example as a reference for your thought process. Some people may be great when it's time to laugh, go shopping and travel, but they'd make terrible roomates. So if you have difficulties refusing a project, you can use the roomate example to see how you could tell a friend you both won't be a good fit without hurting his/her feelings.
With clients it's easy because the emotions are often expressed in what I call "money-love"; they're happy, they pay you, on time and hire you over and over again or refer you. With friends and family, that money-love concept isn't present; they want to mix the "love/guilt" currency as a coupon card, and that's not always fair because... well... you also need a certain fixed portion of money-love in your life to survive as anyone else. Already you know how many family/friends projects you can allow in your life by accepting the fact that the portion of money cannot be traded totally for love, exchange of skills or fun. That's something that's also easy to explain to people.
One extra rule I have in business is if someone uses the "emotion language", that's manipulation and that means I'm not given entirely the freedom to choose; these people put a weight already in the scale and influence your decision in an unfair way. That's like being salesy using emotions. For example, people using guilt on you or all sort of clichés they saw in the movies or read in self-help books (eg. BFF, "when you start a business, your family is your first network", "If you don't help me, I'll fail", or "if you don't help me, I can't achieve my dream", or worse "I have health issue", etc.) Make sure you identify when this happens and take a few steps back to take the time to think about the "offer." Lot of time, there isn't much for you in this and working because of guilt is the worst kind of currency you can get. The only suggestion I can give you on how to answer to these kinds of requests is to read about the Stoics and real businessman such as Mark Cuban (not the self-help kind of people.) In a way, for friends who use emotions and guilt, they're also unfair to themselves because that will affect their critical thinking of your work as well. You will feel fair if you refuse to work with someone and can explain them they might get more freedom if they work with someone else they can freely criticize and who will treat them entirely as clients.
The only time I've seen that kind of project work well is when working for people who had money and were already in business; they're usually respectful of your skills and time, and appreciate that you're respectful of theirs. Whenever you work with people who have no respect for this, client/friend/family, you know it's going to be a long painful ride! It's not something you can negotiate on if there's no good currencies offered to you to compensate for your time.
If you decide to exchange services, make it clear that the services needs to be exchanged at the same time and not 6 months later. You start the project when they're ready to give you back that favor, not before. Make them work for this; if they won't, then just put the project on the ice and wait. That's fair and a good way to motivate them. You'll already sort out in a passive way the friends/family who aren't really serious about their own business because this is often what happens too; they'd probably think twice if they'd pay full price with a stranger and they would never dare to ask for free stuff. You can ask people "what can you offer me?" and then you decide if this has any value to you. A lot of time when you exchange services for other future services, you'll realize that when it's your turn to get help, these people have absolutely no shame or discomfort to show you a full invoice for THEIR services. These exchanges need to be done at the same time to be fair, this way there's no frustration.
It may sound harsh but when people know how you treat your business
and what kind of self-respect you got, they stop "trying" or using
unfair emotional techniques to get something out of you; and the ones
who are eternal takers simply move on to another victim because you're simply
too much trouble for them, and not worth the effort. They have a different set of currencies and they will keep doing what works for them. The best is to make it clear you won't play that game and limit your interactions with them to watching hockey or drinking imported beers.
So the questions you should ask yourself when someone close to you ask you to do some work is:
- Do I have time or do I need to educate them in business?
- Will this create tension in the relationship, what's my priority and
- Will we both gain something out of this in the end?
- What's the currencies being traded? Is it what I want?
If you don't consider these questions, you're gambling with the good relationships you have with these people. Gambling means you can lose more than what you already have.
Sometimes it's better to refer them to another designer you trust. The only time I make an exception to this rule is when my parents need something or when I have a personal interest in a project, and selfishly gain something from it: fun, experience, network boost.
If your friends/family pay you a fair amount and behave like your ideal clients, you don't put them on the bottom pile... You treat them like clients. If they use another currency, then yes, real business goes first!
And don't forget you could be the person who is a "people pleaser" and that's something you need to work on. People might not know you get into their projects because you felt you had to or you felt guilt. It's not fair to them. If this is the situation you feel you're going through when dealing with people close to you, ask yourself why you're a people pleaser and what do you gain from this. If your gain is erasing the feeling of guilt, then ask yourself why you felt guilty in the first place, and keep going until you find the real deep reason why it affects you and controls the way you take these decisions. Keep the religious, social or family conditioning out of this thought process; they do not belong there. Then refer to the money/fun/skills life "pie" and divide that pie in a fair way for yourself and your kids/wife/husband/partner if you have any. Then share what you don't need with friends and other members of the family (eg. brothers, sisters, cousins, aunts, etc.) If you can't divide that "pie" fairly for yourself and your own family, don't forget that this "bad generosity" can also make you a burden to them one day! It's totally fair and reasonable to put yourself first without being an a*******, and it's vital.