Keys to running a successful family business

Getting Started Jan 19, 2016

Family-run businesses present unique opportunities and challenges. Learn how to head off conflict and work together successfully.

Family businesses are structured in many different configurations: Married couples, parents and children, siblings, and multi-generational companies. Working with people with whom you already have a relationship has advantages and challenges. Successful family businesses follow these guidelines:

Put it in writing. A family business should play by the same rules as any other small business and have a written partnership agreement.

In the long run, it will go more smoothly if you take time to assess each family member’s skills and where he or she can be most effective.

Decide roles and responsibilities. To get the business going everyone may want to pitch in and do whatever needs to be done. However, in the long run, it will go more smoothly if you take time to assess each family member’s skills and where he or she can be most effective. Some are big-picture thinkers; others are worker bees. Play to the strengths of each person.

Handle the details. This is one instance where micromanaging actually pays off. Decide details like who handles petty cash, who takes out the trash, and who schedules time off and you’ll prevent squabbles that can turn into big distractions.

Invest in the future. As any business grows, it becomes 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 (from digital equipment to digital media) your employees will need to keep up with these, too.

Don’t be afraid of “outsiders.” Having an outside board of directors, or advisers like a lawyer and 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.

Develop future entrepreneurs. The founding member of most family businesses is a true entrepreneur. Even in an established company, it’s important to fan the entrepreneurial spark in order to carry the business into the future. The business will inevitably need new products or processes to grow and compete. Encourage employees to continually look beyond the current business and think of ways to improve, expand, or diversify.

Accept that some family members may leave. Some family members may leave the business to pursue other ventures. Even if they are not connected professionally, they can still support the family business through social events, charitable activities, sports, etc.

Make family time. Work can easily become the main topic at every family gathering, which can lead to burnout and work-related problems spilling over into personal relationships. Make it a point to plan events just for fun, or have an agreement that at Sunday dinner, conversations about work will be off the table.

Pass the torch with grace. To ensure the continued success of your family business, a transition plan should be worked out and agreed upon well before it is needed. This is another instance when having a written agreement will head off problems.

Don’t attempt mind reading. You may assume your relatives are all on the same page, but you’ll never really know till you ask them. Give everyone an opportunity to express his or her views without judgment.

Running a business together can enrich your family in many ways. Be sure to strike a good balance and respect family and business boundaries, and your family could find achieve great success.

 

Kelly Burkart is a freelance writer from Minneapolis, Minn. While she has spent most of her time writing about financial services the past 15 years, she has also explored and written about everything from cardiovascular health to travel, higher education and sustainable energy practices.

 

KELLY BURKART
Article by KELLY BURKART, Content Strategist/writer