10 tips on how to run a successful family business
Your family-run business can present you with unique opportunities and challenges.
When you work with people with whom you have a personal relationship, you have to include special considerations in your business operations. Whether you and your business partners are married to one another, parents and/or children of one another, or siblings, here are 10 guidelines to help you learn how to run a thriving family business and head off potential conflicts.
1. Put it in writing
Your family business should play by the same rules as any other business and have a written partnership agreement. A written agreement can lay a solid foundation for your partnership and prevent future misunderstandings or legal actions.
2. Decide roles and responsibilities
To get your business going, everyone may want to pitch in and do whatever needs to be done. However, in the long run, you and your partners will be more productive if you assess each family member’s skills and where they can be most effective. Some may be better at big-picture thinking, for instance, others at daily, practical work. If you find it challenging to negotiate the dynamics of your personal relationships, remember to focus on the positives and play to the strengths of each person.
3. Don’t attempt to mind read
You may assume that your relatives are all on the same page, but you’ll never really know until you ask them. Give everyone an opportunity to express his or her views without judgment.
4. Be specific with details
More often than not, arguments develop out of misunderstandings. You can avoid many conflicts simply by being specific with agreed upon plans and responsibilities. Decide details like who handles petty cash, who takes out the trash and who schedules time off. If you communicate clearly and establish rules everyone understands, you will prevent small squabbles that can turn into big distractions.
5. Plan for the future
As your business grows, it will become more complex. Make sure your family members are prepared to grow along with it. Participate in classes, seminars and other professional development opportunities to keep pace with your industry. As technology brings changes, your employees will need to keep up with these, too.
6. Don’t be afraid of “outsiders”
Having an outside board of directors, or advisors like a lawyer or an accountant, provides you with expert, objective advice. Like-minded family members and those who can’t agree on anything can benefit from the perspective of trusted advisors.
7. Develop future entrepreneurs
The founding members of most family businesses are often entrepreneurial. Even if your business is an established company, it’s important that you fan the entrepreneurial spark in order to carry the business into the future. Your business will inevitably need new products or processes to grow and compete. Encourage employees to continually look to the future and think of ways to improve, expand or diversify.
8. Accept that some family members may leave
Some family members may leave the business to pursue other ventures. Know that this is a common occurrence and not always a black-and-white issue. Even if your family member is not connected to the business professionally, he or she can still support the business through social events, charitable activities, social media, word of mouth, etc.
9. Make family time
Your business can easily become the main topic at every family gathering. This can cause you or your family to burn out and spill work-related problems into your personal relationships. Make it a point to plan events just for fun, or make agreements that at established times, such as Sunday dinners, conversations about work will be off the table.
10. Pass the torch with grace
To ensure the continued success of your family business, work out a transition plan for members to take over in the future, and get buy-in from your family well before any transitions take place. This is another instance when having a written agreement can prevent personal and professional problems.
Many of the common problems with family-run businesses are often avoidable. Clear communication, preventive measures and respect for personal and professional boundaries can help you avoid problems in family-run businesses and lead your family to great success.