5 Tips on Running a Successful Family Business
Happy National Family Day!
Running a business with your family members can be a challenging venture to get into. Conflicting ideas and a lack of filter tends to cause chaos within family-owned businesses. In the startup phase of the business, potential dangers can be especially acute as the excitement of starting a business seems to take over. If your family is involved in business together, you should discuss compensation, exit plans, and solutions to problems that may come about before starting your venture. There are a handful of essential ways to find the right balance when running a family business.
1. Set clear boundaries
It can be easy for family members to discuss work inside and out of the office. However, mixing business and one’s personal life will eventually create challenges for the family. Try to put a limit on discussions of work outside the office or specify appropriate times to have these discussions. Communication is key in a family business, so consider weekly meetings to assess progress or resolve any potential conflicts. Roles and responsibilities should be clearly divided and handled separately, so not two family members are attempting to complete the same set of tasks. It is important that you find your family member’s strengths and weaknesses, and have each person committed to a role that suits them best.
2. Treat it like a business
One of the biggest challenges of a family business is placing too much emphasis on the “family” part, and not enough on the “business” side. The aspects of a healthy business may not always be compatible with family harmony, so be ready to address these conflicts and think about potential sacrifices you may need to make. Of course, it is important to recognize the advantages of a family-owned business as well. The biggest includes access to human capital in the form of family members. Here, you are guaranteed workers who you know will care about the business’ success just as much as you do.
3. Treat family fairly
Dedicated family members allow for small companies to thrive. These family members are typically qualified in the area of specialty and are a great asset to the team. However, it is vital that you avoid certain things when hiring and working with family members. First, avoid favoritism. This is easy to pick up on and singles other workers out, creating conflict. Secondly, every aspect of employment should be handled evenly among family members. In this sense, it is important to address pay scales, promotions, work schedules, criticism, and praise equally among all workers.
4. Draw clear management lines
Family members who have a presumed future ownership in the company tend to reprimand employees who don’t report to them. This will lead to resentment in the future from employees and may ultimately negatively impact your business. Instead, it is beneficial to put business relationships in writing to make sure everyone knows their role. Outlining specific management duties will help avoid hurt feelings and miscommunication.
5. Develop a succession plan
A family business without a formal succession plan is a disaster waiting to happen. This plan should be created to spell out details of the company’s future and future employees. This plan needs to be financially sound and realistic, so outside professional help is essential. Additionally, having outside experience is helpful in the future success of your business. If you are hiring a family member without credentials within the field, it may be beneficial to hire outside of the family who has real experience. With outside advice, there is more room for new perspective, creative ideas, and strategic thinking and planning.
Running a business comes with a whole set of unique challenges. Mixing work and personal life can be tough, but manageable with these essential tips. Are you looking for a place to expand or start your family business? As a family owned and operated business, The Anderson Group is the best place in the Albany area to lease office space from for your family company as they understand the unique position your business is in.