Family owned businesses are the backbone of our economy. According to statistics, 90 percent of all businesses in the United States are family owned, and these include some of the wealthiest and successful brands in the world.
However, many businesses don’t get passed down to a second generation and the reasons for that are varied, but suffice it to say, not making long-term prosperity a priority is among them.
There are many things that make a business successful like structure, values, and good business sense. Running a business with your family, however, requires some additional skill sets. Given the intimate relationships inherent in most families, anyone seeking to go into business with a family member needs to make sure to keep focused on what matters the most in their lives.
Discipline, planning, and recognition that family relationships come before everything else will be equivalent to lasting success. Here are some helpful tips and suggestions to help your family owned business survive.
No matter what business you are in, or how much money there is to be made, family relationships should always trump the business. Not setting family high enough on the priority totem is bound to create strain which can end up costing your business.
Make it a priority to separate family matters from that of the business. You can always build more businesses, but you only get one family. Make them your priority and your business will reap the rewards as a result.
A family run business, like any business, must have a solid structure to it. This can happen by understanding and defining roles early. This is important because conflict can result when there is no clear leadership. Your business will benefit when responsibilities for specific tasks are clearly defined.
Establish frequent meetings and make sure they are effective. Everyone needs to know the purpose of such meetings. There is no room for ambiguity in this department. During these meetings, discuss roles based on individual skills and talents, and find the right place where everyone feels their role is important and enjoyable.
This practice will not only help with accountability. It will fuel engagement and job satisfaction as well. Establishing such boundaries and clearly defined roles, will ensure the family business is run like a business should be.
Business and family relationships are both prone to disagreements on occasion. Treating your family business like any other business, therefore, is imperative to success. Some family owned business partners are reluctant to draw up partnership agreements for fear it is too cold and formal for family members. This is a mistake.
Formalized agreements protect all parties including the business itself. In fact, formalized contracts, share issuances, job descriptions and operating procedures are even more important in family-run companies because the intimacy of the relationship leaves room for ambiguity and subsequent disaster. Formalized agreements mitigate potential rifts and help ensure everything from dividend payouts to disciplinary measures is in writing prior to the business's launch.
As with most worthwhile endeavors, communication is a key component to success. This is particularly true for family run businesses. Your business, and maybe even your family, will become stronger when all members have open lines of communication with each other.
The ability to be able to communicate problems big and small in a family business takes effort, as there are often various nuances that make such communication complicated at times. If you want your business to succeed, work on improving the quality of family communication and always communicate clearly and openly with each other.
Keeping in mind that the business is not the only thing in a family's life, nor should it be, is an important consideration for success. Finding and maintaining the right balance between work and family is hard for any business owner but it may be even harder for owners of family businesses.
Make sure to schedule days off together, even if just one day a week. Take time away from the business to go out to dinner or play a team sport. Try not to discuss the business at all during this time. Remember, the stronger the family, the stronger the business.
Running a family business can be an enriching and joyful experience. However, it can also be stressful and damaging to close relationships. Knowing how to avoid the common pitfalls many family owned businesses find themselves in will only make your business more successful. In some cases, it might actually strengthen your family as well.