The majority of new companies started in America are by families. Brothers, sisters, husbands and wives, fathers and sons are the most common type of business partnerships in the United States. Family-run businesses are amongst the most successful and also the most stressful types of businesses.
They are unique challenges and benefits of starting a family business.
To run a family-owned business profitably and to maintain loving relationships require preparation, patience, and understanding.
If you want your business to be passed on to your next generation of children and your grandchildren, you need to build it correctly from the start.
The 1st phase of startup, for all businesses, especially for family partnership businesses is the most critical. Many family members will want to get involved in the fun part of starting a business but often they do not understand all the hard work involved long-term.
Be very clear up front about salaries, exit plans, business loans, and other details about your entrepreneurial venture to all involved family members. Many family-run business problems could be avoided by clarifying expectations and having honest discussions often.
Many family-run business problems could be avoided by clarifying expectations, of all owners and having honest discussions often.
These tips for running a family business are based on based on interviews with successful entrepreneurs.
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It is a mistake to put too much emphasis on the family and not enough focus on business matters. Some correct business decisions may not meet with all of the family member’s approval. Be aware that these situations will arise and be prepared.
Communication is Key
Don’t assume that because you are closely related, all the employees of the business don’t need to communicate formally. In fact, it may be more important to set up weekly business meetings to discuss goals, conflicts, and your plans.
Clearly, define roles of each owner and employee by having a written job description. Assigned specific individuals their responsibilities and don’t overlap with other family members jobs.
Boundaries for Separation
It is important for families to segment time for business aspects and time for being a family. Make a point to curtail discussing business outside of the office or factory. This is not easy, instead, add those items to an agenda for a formal business meeting.
Fair Treatment for All
It is inevitable that you will hire family and non-family workers in your firm. The cost-saving labor of family and the high level of trust built many of the great family businesses of today. However, be sure not to give favor to your family members be sure that salaries, promotions, scheduling and job appraisals are the same for both family and non-family employees. This means that you will not set higher or lower standards for your family.
Misunderstandings between partners, whether family members or not is one of the top reasons for conflict and business failure. Avoid this problem by clearly delineating, in writing, the compensation, ownership portions and job roles for each family member.
No Sympathy Jobs
Never hire your kids, or other family members, out of pity for their situation of joblessness. All jobs should be filled based on the skills and experience needed for your company.
Since a close-knit family works together, it can sometimes be hard to make tough choices. Hire outside professionals who have greater knowledge and new ideas that can help clarify important decisions. Additionally, outside consultants can communicate well, those difficult subjects with your family because of their lack of emotional involvement.
Next Generation Plan
All family businesses must have a formal, written succession plan at the ready. Everyone will die. Your family firm needs to be prepared and ready to act during this time of grief. All proper plans detail the exact way the business will be passed to the next generation. Considerations for both the financial health of the business and the retiring owners will be given. Professional legal advice for plan development is highly recommended.Get knowledgeable legal help at great prices – Legalzoom.com
Train the Next Owners
if your children will be the next manager-owners. Be sure to get them trained properly in business by having experience working outside of the family business for at least 3 years.
It is difficult to start a business, and even more so with the emotional involvement of family relationships. However, businesses run by families have many pluses over other types of businesses – a group of people deeply committed to the success of your firm.
Family business startups need to take extra precautions to steer clear of owner burnout and maintain good relationships with the family.
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