Secure the Foundation of the Family Business
Explore 10 key factors for laying the groundwork and succeeding into the future, for running a family business.
Running a successful family business is rarely simple. Problems can arise that hamper business success and disrupt family relationships.
Don’t wait for problems to destroy your family business. Instead, be proactive and plan ahead, positioning your family business for long-lasting success.
Here are 10 key factors to running a successful family business:
Proper Business Planning
Create a plan that defines your family business and what you want to accomplish. Develop a mission statement and values for your company. Be as specific as possible in your plan.
Your business plan should include things like an executive summary, company description, and market analysis. If you need help getting started, check out the business plan tools and resources available from the Small Business Administration.
Outline Roles and Responsibilities
Define the roles and responsibilities for any family members involved in your business. Be transparent and ensure each family member knows what is expected of them. In addition, ensure everyone knows the consequences of not performing their duties.
Along with roles and responsibilities, determine job titles and compensation for each person. Make sure that it aligns with the work performed.
Keep the lines of communication open with family members about your business. You can implement this by hosting regular business meetings. Utilizing a family group text or having a designated messaging program (i.e.: Slack, Asana, etc.) can help everyone stay connected and aware of what is happening at all times. It also helps family members separate their personal and business communications, preventing the chance for miscommunication.
Try to focus exclusively on business communications during business hours. If you want to discuss a family matter, bring it up before or after work.
Do not hesitate to temporarily step away from your job if you’re struggling to maintain a healthy work-life balance.
Require Industry Experience
You don’t want a “monkey business” led by family members with no experience. To avoid this problem, require a minimum amount of industry experience for any family members who want to join.
If they want to join but lack sufficient experience, encourage them to get training. You can even develop apprenticeship or internship programs that help them build their skill sets and gain hands-on experience.
Hiring, Firing, and Disciplining Employees
Establish an objective HR policy. If necessary, consult with an HR firm for assistance. This allows you to define terms for hiring, firing, and disciplining employees. It reduces the risk that any external family conflicts could complicate family business ownership.
Do not let family matters influence business decisions. For instance, a family member may want to hire their son or daughter. It may be in the company’s best interest to leave this family member out of the hiring process. This ensures that their son or daughter is fairly evaluated. If this individual is the best candidate for a role, he or she can join the business.
Put your customers’ interests top of mind. Conduct market research to determine appropriate prices for your company’s products and services. Track your finances and evaluate them regularly.
If you find your company is losing money, address the issue with family members. At this point, you and the rest of your family can work together to get your business’ finances in order.
Maintain a Healthy Work-Life Balance
When family meets business, your work-life balance can deteriorate. Because if a family conflict arises, your company can suffer.
Do not hesitate to temporarily step away from your job if you’re struggling to maintain a healthy work-life balance. If you’re comfortable with it, let your family members know how you’re feeling. This helps open the lines of communication with your family. From here, everyone can ensure you get the help you need. Most importantly, you’ll be able to develop and maintain a healthy work-life balance once again.
If you and your family members learn from one another, your business is well-equipped to thrive.
Setting Up a Succession Planning
Set up a plan if a family member wants to leave the business. This plan creates a smooth transition if a family member gets divorced, retires, or exits your company for any other reason.
A succession plan can encompass onboarding for a new employee who will replace the departing family member. It can also involve letting this family member train their replacement.
Transferring Ownership or Selling the Business
Conduct a business valuation if you intend to transfer ownership or sell your business. The valuation should account for your company’s history, current operations, and growth potential.
A business valuation gives you a good idea about how much your company is worth. Also, the valuation can affect asset distribution among family members.
Get third-party feedback about your business. Look at customer reviews to find out how clients feel about your business’ products and services. If you identify improvement areas, work with family members to address them.
Engage in discussions with your family regarding their work performance. Employee feedback is paramount for running a successful business. If you and your family members learn from one another, your business is well-equipped to thrive.
The Bottom Line on Running a Successful Family Business
Research indicates most family-run businesses fail by the second or third generation. However, with proper planning and attention to detail, your family business can succeed starting on day one.
Run your family business in the same way you would any other workplace. With this approach, you can lay the groundwork for a successful family business. You can also keep your company going strong long into the future.
Noah Rue is a journalist and content writer, fascinated with the intersection between global health, personal wellness, and modern technology. When he isn’t searching out his next great writing opportunity, Noah likes to shut off his devices and head to the mountains to disconnect.