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In the Same Boat: 9 Tips for Running a Successful Family Business

by Olufisayo
Published: Last Updated on
Antrix Corporate Solutions Ltd
family business

Running a small business on your own is difficult; running a family business can be even more so. There are many tasks that have to be completed, and it can be difficult to find that fine line between getting things done and not offending your family. It can be a blessing or quickly become a disaster if it isn’t handled properly. The main difference is that you can fire employees; you can’t “fire” family.

Not to say that you shouldn’t consider the option if it’s being presented to you. A family-run business can definitely provide you with plenty of opportunities that you wouldn’t normally find on your own. And if everything goes well, the family business will likely pass down to you for you to continue running. However, there are some essential tips that you need to keep in mind if you want the business to be successful and not run into the ground because of familial conflict.

family business

1. Communication is Key>

The first step to avoiding conflicts is to ensure that everyone is on the same page, and this can only be accomplished with sufficient and clear communication. Assuming that your message is getting through is a recipe for disaster. Lay out exactly what your expectations are and ensure that everyone understands exactly what is expected of them.

A failure to communicate is what makes most family businesses fail. Never assume anything and build trust between you and your family members. Lay out the goals of the business and practice transparency in everything that you do. Have meetings on a weekly basis to see the progress of projects, determine the weak areas of the plans you have, and to resolve disputes if there are any.

Open communication also means that your family members are more likely to raise any concerns before they become a bigger problem.

2. Clarification of Roles and Responsibilities

Clearly defining the roles and responsibilities of each person is very important. The more you explain what the job description entails, then the less chances there are for workplace conflict. Take the talents and skills of every person into account and see where they fit best. Where there is a lack of responsibility in a certain area, double up on roles to ensure that the work gets done and that there’s a second person double-checking everything. Having a structure in place guarantees that everything will run more smoothly.

If you notice that someone isn’t doing their part or is interfering in someone else’s role, have a discussion with them as soon as possible and discuss why they feel the need to step outside their responsibilities.

3. Appreciating the Value of Family Ownership

Being involved in a family-owned business provides you with invaluable benefits that you wouldn’t find in the outside business world. One of those advantage is having access to capital in the form of family members. There is no need to search for employees (though you may have to to fill in the gaps in your business) and family members provide you with low-cost labour.

Secondly, emergency loans are more readily available, just as long as you don’t betray their trust in paying them back. Always make sure that you keep a paper trail on the loans you’ve taken and the deadlines set to repay them. If you do feel awkward about borrowing from your family, however, there are private equity firms you can turn to to help you find the money you need.

Thirdly, there’s less of a need to draft up legal documents and setting up special accounting systems to keep track of everything. YOu can run your business the way you want in a manner that keeps everyone happy.

4. Formality

Yes, you’re keeping the business in the family, but that still means you have to keep everything professional and formal. Contracts and agreements for certain aspects of the business should be kept in writing and signed by all parties involved. Disagreements that creep up later on can be handled more effectively than allowing it to turn into a brawl. Verbal contracts become a matter of “he said, she said,” which doesn’t solve anything. That’s why it’s always a good idea to keep a formal, written document of every project and the individuals involved. They will save you on a lot of time and headache in the future.

5. Place your Expertise on the Table

You may be running the business, but it’s not your opportunity to sit back, kick your feet up, and relax. You’re involved too and you should do your part, or else the rest of your family/business owners will start to believe you’re mooching off their hard work. You shouldn’t act like a big wig in your fancy office, watching everyone else work around you.

Sharing your expertise also means allowing your family members to shine. If someone is really good at accounting and math, let them handle the books and don’t try to interfere except to oversee their work. Let everyone play their part so that they feel like they’re contributing to the overall goal of running a successful business.

6. Treat Everyone Fairly

You’re not going to win any brownie points by playing favourites.  Treating everyone fairly and equally ensures that you’ll have a business to pass down later on. Give credit where credit is due and don’t take sides in arguments. Strive to remain neutral in order to arrive at fair and balanced decisions.

Avoid setting different standards for different family members; this includes criticism, pay, and work schedules.

To make it easier for you to assess the skills of each person, develop a grid and grade-based system. Looking at individual competencies and base achievements on set criteria. Or you could hire a third party to deal with this aspect of your business for you. Because they’re not family, they’re more likely to have a neutral approach to everything and no one can accuse you of playing favourites.

7. Have Broad Perspectives

Working with your family members in the business can sometimes lead to stagnancy. To fix this problem, look to outside advisors to provide you some guidance as well as a few creative ideas to keep your business going. Don’t think of it as a betrayal of your family; sometimes you just need an outside source to figure out what the business is missing. Getting a fresh perspective from an external source will show you what the modern trends are and how to adapt them into your business.

If you’re not sure where to go, you could always hire a business plan consultant to take a look at your information. They can find where your pitfalls and strengths are, and help you to figure out the next step to keeping your business afloat. Whether you choose to meet with them alone or with the other founders of your business is up to, depending on the kind of working relationship that exists. You don’t want too many cooks spoiling the broth.

8. Family Dynamics Should Remain Outside

When you’re at home, everything is fine, but once you step into the family business, there is no room for drama. Emphasizing too much on the “family” aspect of the business will make you lose sight of what’s important. Maintaining the balance between family and business is a difficult one, one that not many businesses can keep separate

Personal and professional relationships should be established, maintained, and kept separate. Any disharmony that’s occurring within the family aspect should not not influence your decisions when it comes to running the business. As a rule, during family gatherings, you should never talk about work-related topics; keep this during the realms of business hours where discussions can be controlled in a professional setting.

9. Plan the Succession

Develop a plan of succession from the get-go so that in the event that the worst happens, there are no arguments in the future. This is a good plan to do if there are siblings and other extended family members involved. The last thing you need is everyone arguing about who is supposed to take over instead of actually running the business.

The plan should details when the business will be passed on and to who, in what order. To make it easier for those who will be taking over your role, establish a timeline of when new management should be trained and which roles the founders of the business will continue to play.

Running a business is complicated enough, in and of itself. Throwing family into the mix can make it even more complicated. The baggage that comes with hiring family members is an unavoidable one, but with the right plan in place and ensuring that everyone is on the same page, you’ll reap the rewards in no time. Ensure that the workplace is a harmonious place to be in and that everyone is clear on the roles they’re supposed to be playing. One slip-up in any of these areas, and you could end up with a disaster on your hands.

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