7 Tips for Succeeding as a Family Business
Nine out of 10 businesses in the United States are family-owned, according to the Small Business Administration. That’s an impressive statistic, considering all of the minefields associated with keeping things in the family. The hiring process may involve some degree of nepotism. Emotional concerns may obscure objective decision-making. Family squabbles may poison professional relationships.
Here are seven tips for tilting the odds of success your favor if you run a family business:
- Establish a clear chain of command. As with any business, it’s imperative for everyone to know who’s in charge. There should be a distinct line of authority for decision-making. Identify which family members have a role in making key decisions and which do not. Once this has been determined, put it in writing. Establish a formal policy outlining roles and responsibilities, methods of conflict resolution, compensation guidelines, and other business matters.
- Communicate! This may seem obvious, but sometimes one family member assumes that close relatives simply “know what I’m thinking.” Truth is, they often don’t. Communicate clearly and often. Consider holding regular meetings to discuss the state of the business and to settle any disputes.
- Hire the right person for the job. The leader of a family-owned business may be pressured to hire an uncle or a sister-in-law just because he or she needs a job. Avoid this at all costs! As with any business, hire only candidates with the right skills and experience. If there’s no way around employing under-qualified relatives, set up an arrangement whereby they can be mentored by non-family members or work in different areas of the company until you can identify what their strengths are.
- Treat everyone fairly. Avoid favoritism at all costs, whether resolving conflicts, determining salaries and promotions, or drawing up work schedules. Praise and criticize where appropriate, whether or not the employee in question is related to you. Everyone in the business must meet the same professional standards. Anything less can severely demoralize employees outside the family.
- Seek external advice. Even the most successful family business runs the risk of becoming too insular. “Outsiders” offer creative ideas and fresh perspectives that can take the company to the next level.
- Don’t take business home. When several family members work together, it’s natural to talk about business at home. But this means you risk having professional matters collide with personal or family issues. Plus, wouldn’t it be nice to not talk about business and just enjoy your family for a change?
- Plan for your successor. The time to plan for the future of your family business is now. Start a discussion about long-range goals, such as who wants to stay in the business after you leave (and who doesn’t) and what roles other family members may want to play. Put together a succession plan that clearly delineates how and when the next generation will assume leadership to keep the business growing for years to come.