9 Keys To Running A Successful Family Business’
As exciting as the idea of running a family business may sound, just like any other business, the journey comes with a lot of risks. And although a family-owned business is a key economic driver, only 30% manage to endure to the next generation, with a discouraging 3% surviving to the fourth generation. So, what does it take to set up and run a successful family business? Hopefully, the following tips will help.
1. Have A Plan
This should be obvious, right? Whether you are planning to set up a small family business or a huge establishment, you need to have a plan in place. And it all starts with a simple but well-thought-out business plan. Your business plan should contain not only your vision and goals and how to achieve them, it should also include a detailed financial strategy of how to finance your business. It should also outline the roles of each family member that you expect or want to be part of the company. Your business plan will play a huge role in convincing potential investors to buy into your vision. A bank will also require it should you need a loan.
2. Communicate
Most people agree that different families have different ways of communicating – some very effective, others less so. But no matter what the nature of communication in your family is, it should not be extended to your business, especially if it is not a healthy style. Healthy communication is key to having a successful family business operation – or any other business for that matter. So, defy what your convention is, and make communication in your business very open, regular and considerate. Also, make it an essential part of your family business. Family members have a greater tendency to extend personal emotions into the business environment. So, anytime you sense that there is some sort of communication deficit, take immediate steps to confront the situation. If the problem is a result of bigger family issues, you can always bring in an outside consultant.
3. Evolve With The Times
Make your operations flexible enough to allow for changes and make it possible to change or evolve with the times. We have already mentioned the percentage of family businesses that manage to survive for a couple of generations. One of the main reasons behind the longevity or otherwise of a family business is its ability (or lack of) to be flexible enough to accommodate the new times, new ideas, changes, etc. Whether the change comes in the form of new technology or a cultural norm, your family business should be able to evolve in order not to risk being alienated by customers and even employees.
4. Create Boundaries
One of the biggest challenges of operating a family business or working with the people you love is the tendency to step beyond boundaries. However, it is essential to have and establish boundaries. One thing that most owners of successful family businesses have in common is the fact that family issues are not brought into the business environment. Setting boundaries is essential to running your business successfully.
Define the roles of each family member, as outlined in your business plan, and ensure that no one steps beyond their lines. If there are any personal grievances at home, take the initiative, and solve them at home before starting working. It may take some time for your family members to get used to it. So don’t give up after a couple of failed attempts.
In addition, make it a pint not to take office business home. And if you are working from home, then it is best to create a separate workstation.
5. Recruit Workers From Outside
No matter the size of your family, it is always best to recruit capable people from outside to fill both staff and leadership roles. Your family business is still a business, and thus, requires the best hands on deck. Therefore, make it a point to scout for qualified people with enough experience in the kind of leadership positions needed. Such people will bring the required professionalism devoid of family and emotional sentiments – even though you should treat them as family members. There is an abundance of talent waiting for opportunities. So, go ahead and tap into this pool to cover the areas where your family lacks in skill and expertise.
6. Treat Your Workers Like Family
One of the keys to running a successful family business is treating your employees or workers like family. This creates a sense of belonging and appreciation in them and will reflect in the attitude they will show towards work. People who feel accepted or part of your family are more likely to put in extra effort in their responsibilities. They will be more likely to give their best to you and even make sacrifices they may not be required to make.
In the same manner, do not show bias to your family members – especially when your workers are watching. Ensure that everyone follows the rules, shows up to work on time, etc. You can take advantage of time tracking and payroll software to cut down on time theft. Visit https://getsling.com/employee-time-clock/ for more info. Additionally, it is recommended to also put your family members on payroll, even though they may have shares in the business.
7. Make It Optional
One of the common mistakes that most leaders of family businesses make is making it mandatory for everyone in the family to join the business. That decision should be left to each individual to make. If your kids, for example, are too young to decide whether they want to join the company, you should give them time to decide. Also, if a working member of your family wants to opt out, they should not be tied down – neither should you use any form of emotional blackmail, guilt, or strong-arm to keep them. They will not give their best, and in extreme cases, may even rebel or sabotage the business in a way. Therefore, it is important to always make clauses in their contracts that allow them to leave when they want. Their contracts should also cover what happens to their shares. The most important thing is to have open conversations with your family members about all these, and ensure that it is well understood.
8. Practice Good Governance
We have mentioned the importance of bringing in outside talent to work with you. The same policy should be extended to leadership positions in your business. To practice good governance, you have to bring in leaders that are from outside the family. Such leaders will be best placed to handle supervisory and even advisory duties. Their expertise, experience, and talent will ensure that they deliver exactly what is required of them. At best, you should have a supervisory body consisting of non-family members with only a few family members.
9. Make Plans For The Future
Your family business should be able to survive generations – or at least, last for as long as you want it to. So, make plans for the future. Set time apart to develop succession plans even long before you need them. Invest in your children, and give them the needed training to take over when you cannot. Also, observe and identify talented workers outside the family that have what it takes to take on leadership positions in your absence. Invest in them in order to gain some form of commitment from them. These are the ones that will be able to put your family member in check in case of any form of mismanagement in your absence.
