A family business has many advantages. It has a group of people you trust from the start, it brings a better atmosphere to the workplace, it can be more productive and understanding, and so on. But, even with its many benefits, some factors can make it easily go wrong. This will not only impact the office climate but also the climate at home. With this in mind, we will talk about the most important things you should and not do when starting a family business. Let’s get right into it.
The Do’s
Make the Leadership Structure Known to All
Working on a business with your family members is a true test of bonds. While you might disagree on some small matters and forget about them, you will, eventually, reach big-picture disagreements that cannot be compromised. When it’s a question of who has the final say, everybody needs to be aware of the answer. There needs to be a set hierarchy that guides the decision-making process in the business. This might seem a bit harsh but think about it, would you speak up against your manager or boss at the workplace and tell them your way is better? Just because they are your parent does not mean you get to talk back or question their decisions.
Like any successful business, you need a solid backlink in the background to make the front work well and appear valuable and respectable to the customer. If you have a boardroom meeting and disagree about fundamental things like for example who to promote, it can be an advantageous move to hire an outside person who will speak out in a less biased manner.
Agree on the Strategy You Want to Pursue
As you might have guessed, every successful business needs to have a great business plan and a well-thought-out strategy going into the business realm. This can be related to anything from investment opportunities and business priorities to profit distributions and payment structures.
Utilize Family Values
For any family business, it is important to highlight all of the values that you want to bring to the table. This is an advantage of family businesses because if you are sensible about it, you can place family members in key areas where they are likely to shine the most thanks to their innate talents. This not only allows everyone to contribute to the most of their capabilities, but it also creates a pleasant work atmosphere that will not only help the family but also the regular employees as well. Any person will appreciate a warm atmosphere that only a family can provide. Even though you are not related by blood, the family way of leading things can make the whole business feel like one big family (corny, I know, but it’s true). And this will also lead you to real competitive advantage in the free market.
If you follow this step properly, you will have an incredible start in your business. The foundation is going to stay strong, and thrive on mutual trust, communication, and most important of all, respect.
Maintain an open communication
It is critical to maintain an open communication culture within the company so that all employees understand the working relationships and different levels of responsibility held by family members. Transparency is essential in this regard, as it helps to prevent resentment among non-family employees.
If someone suspects that a family member is getting a promotion solely on the basis of their status rather than merit, for example, morale will suffer, potentially leading to a high staff turnover. Keeping employees engaged and involved in the company’s growth fosters loyalty and fosters a trusting and supportive working environment for all.
Make use of legal contracts and agreements
In the early stages of a business’s development, family members often work together effectively for the company’s benefit, and formal agreements are often disregarded or seen as unnecessary. Given the ease with which childhood roles or divisive family dynamics can be re-adopted, it is especially important for family firms to formally document business issues such as leadership structure and salary rates.
Dispute resolution is strengthened by the presence of formal documents and agreements. They ensure an equitable distribution of earnings and do away with any room for doubt that might otherwise exist. It is helpful to have a plan in place for times of disagreements. Since this is such a touchy subject for family businesses, it’s likely that having an outside expert review the drafts will be necessary to ensure objectivity.
The Don’ts
Don’t Ignore Screw-Ups by Family Members
Would you tolerate an employee that makes the same mistakes as your son? If not, then you have a problem. If you allow a family member to actively make mistakes without any consequences, it will not only lead to the downfall of the business, but it will also shred morale at the office. The regular employees will feel much more demotivated working for you after seeing everything that you let the family members get away with. Just think about it, nobody wants to work in that kind of work atmosphere. If you cannot trust a family member with an important task like construction law, then you should opt to get an expert to do the job instead. Thankfully, in the case that you do need advice on building and construction laws, you have Chedid Storey Legal at your disposal.
Don’t Bring the Family Issues to the Business Side of Things
According to research published in Harward Business Review, around 70% of family businesses fail before even the second generation is able to take over. This is an astonishing number. Now you understand just how easy it is for the family business to fail so swiftly. Among the reasons why this could go wrong is the fact that a lot of families bring their problems into the business side of things. This could be a complete catastrophe for the business. Not only would you be bringing things that have no place in the workplace, but this will also terrify other employees. Of course, we have all been there. There do come times when we cannot just ignore these problems, but you all have to do your best to keep those problems as far away as possible from the workplace.
Do not solely rely on family advice
It is one thing to be able to rely on family in the workplace, but failing to seek independent advice at various key stages is a risky strategy. External advisers bring valuable objectivity and are likely to take a broader perspective than family members. From accountants to legal experts, objective professional advice provides a family-run business with a broader commercial perspective that is free of inherent bias or presumptions, as well as the opportunity to understand current trends or changes in their market.
Starting a family business can be a daunting prospect that necessitates more delicate management than a’standard’ business venture. There is a lot at stake, both in terms of business success and personal relationships among family members, but balancing the needs of all personnel, family or not, is essential for running a successful family firm.
Don’t let business interfere with your personal life
It is all too easy for business issues to infiltrate personal life, but this is especially true when the company is run by a family. This can be a double-edged sword, but by keeping business discussions at the dinner table to a minimum, the line between business and personal life is kept clear.
Separating business and personal issues is a difficult mantra to live by – there is a fine line between quickly discussing something that happened at work and engaging in a drawn-out analysis that should really take place in the workplace.
