Five Key Ideas to Successfully Run a Family Business

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Family-owned businesses are one of the oldest forms of business organizations. In the past, they existed as farms in the countryside. It used to be shopkeepers and doctors who got back-up from their own family members in running their business in urban areas. In recent years, there are at least 5 million of this kind of business enterprise in the US, making it a rich source of revenues and jobs for many people.

Since a family business structure involves two or more family members, its challenges are unique considering uncertain boundaries influenced by blood ties. Personal concerns or rivalries may arise over time as some stakeholders may be keeping a vested interest in the stocks. Some may have more ambition and may want to take over as successor of the entire company. Companies experiencing this kind of conflict may need experienced family law attorneys to settle the dispute. Things will often worsen, causing grudges, termination of some employees, and complete withdrawal of stocks.

There are also conflicts involving employees who are family members and those who are non-family members. The special treatment for family members may turn off among outsiders who consider themselves as more competent for the said position. On the other hand, family members resented the presence of outsiders who may seem like a threat and a competition.

Nevertheless, starting a family-owned business is worth its challenges and risks. Since businesses experience tough competition against each other, starting family members may have difficulty being at par with other businesses. Starting it may be exciting until challenges come along. If you plan to build a family business, here are essential concepts to give you a clear idea of managing this enterprise.

Be consistent in setting boundaries.

It is tempting to destroy the boundaries of work, personal life, and home as people involved are family members. It may be tempting to talk about business over dinner or before bedtime. You are risking your personal relationship with your spouse or other family members if this happens. Set boundaries and limit business discussions outside the house. Also, be sensitive to talk about topics involving work on special occasions such as weddings, funerals, or anniversaries.

Be clear on the methods of communication used with each other.

No matter how close you are to each other, a difference of opinions, ideas, and preferences will happen from time to time. Try to settle these differences regularly. You may want to address them in meetings or online discussions. Be open to talk about these problems and make sure to patch them up as soon as possible.

A family business is a business and should be treated objectively.

 

Prevent situations when family members are too carried away and are not objective anymore to solve a problem. Some people may become too sensitive, emphasizing that ‘family’ comes first over ‘businesses.’ Be ready for these situations and look for ways to restore harmony.

Take advantage of the benefits that come along in family-owned businesses.

There may be differences and disputes, but one thing for certain, family-owned businesses have unique advantages. Human capital is one of these. There is no need to hire more workers as you can always get a family member to do the job. Low-cost or no-cost labor is always possible. Also, trust is an important element in a business. With this, you don’t have to hire third parties to cross-check your accounting systems, policy manuals, and legal documents, as trusted family members can do the job.

Be fair in your treatment among family and non-family members.

Try to avoid favoritism at all times. According to their performance, judge employees, hard work, and dedication and not because they are part of your family. This may be hard to do. In fact, some experts strongly advised not to hire family members in a team. However, one cannot also disregard the savings and low-labor costs that result in hiring family members. Be fair in your treatment and pay scales, grant promotions, and set up work schedules accordingly.

Family-owned businesses can prosper and succeed when managed and supervised well. Draw clear management and personal boundaries and uphold fairness and objectivity at work. Be open to advice. Thriving family-owned businesses may tend to rely solely on family members in terms of advice and methods. This is dangerous and may cause the business to stop growing. Seek advice from other experts and business advisers even if they are outside the clan. An outsider can always give fresh insights and observations that a family member within the circle may not have noticed.

To avoid future conflicts, prepare a succession plan. The plan should be detailed and legal. It must be in written form and supervised by an attorney. This is to inform the rest of the family and the younger generation of the business’s future. Then again, it is best to seek out professional advice when dividing assets among family members.

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