Running a small business is hard. Aside from handling various tasks to get the company off the ground, an executive also has to manage the entire team. When it comes to managing a family business, however, another layer of difficulty arises. A family business can either prove to be a blessing or a curse, depending on how you manage it.
A successful small family business can provide you with an invaluable opportunity to build the business, and help you in passing down the company to the next generation. But if it can’t be managed properly, then it becomes a source of internal family conflicts, and disturbed egos within a short period.
So, the succession of the family business should be a priority for every business that wants to achieve success. Are you ready to run a small family business? Is so, here are some essential tips to running a successful business to help you in dealing with everyday family business challenges.
# Tip 1-Focus on Communication
The first and foremost key to running a small family business is communication. You might assume that your family members understand you so well that you don’t have to communicate with them about your expectations and the nature of a particular project.
This is one reason why family businesses fail in the competitive business world. If you want your company to work, it is essential for you to stop assuming everything on your own and start communicating clearly and openly.
Build trust, determine the values of your business, practice transparency, understand the goals and aspirations within and outside the family business by setting up clear and official methods such as meetings. Arrange meetings on a weekly basis to analyze progress, hear out any differences and resolve disputes.
#Tip- 2 Clarify Role and Responsibilities
While working with the family, clarifying and defining the roles and responsibility of every member is essential. The more you describe the job description to every member, the less room you’ll have for workplace conflict.
So, at family business meetings, consider every person’s skills, talents, roles, and find the best fit for them. This structuring can help you in professionalizing the business entity and improving the accountability of everyone.
#Tip- 3 Maintain Everything Formal
The next tip for maintaining a family business successfully is making sure that each and every contract or agreement is formalized in a documented form. No matter how much you love your family members, disagreements are bound to happen in the company.
Relying everything on verbal agreements such as job descriptions, formalized contracts, operating procedures, and share issuances, are more critical in family businesses. Relying only on verbal agreements opens doors for conflicts and disasters.
So, if you want to reduce any potential family conflicts, then it is always advisable to have everything in writing before you sign up for any project. These documents will navigate you through good and bad outcomes.
# Tip- 4 Understand the advantages of Family Ownership
There is no denying the fact that family-owned business provides you with invaluable benefits in the business world. One of the main advantages of owning a family business is that it helps to access human capital in the form of other family members.
Family members can also provide you with low-cost or no-cost labor, or any emergency loans which is a key to survival. The business entity controlled by trusted family members can also help you in restraining from drafting any legal documents, special accounting systems, and policy manuals.
# Tip- 5 Treat Family Members Fairly
If you want to pass your family business along to the next generation, then treating every family member equally can be the best thing you can do. Several small companies would never be able to survive without the energy of dedicated family members and the hard work for improving the business entity.
You are required to avoid favoritism between family members and other employees. Don’t set standards higher or lower for family members than for others such as work schedules, praise, pay scales, and criticism.
# Tip-6 Set Management Plans
In order to run a successful family business, you need to create a set of management “competencies.” Developing a grid and grade based on the managerial competencies will help you in assessing the skills of each manager, emotional intelligence and skill level of your management team.
In fact, you can also train your managers or senior managers on how to maintain the accountability of every employee for better performance outcomes. A systematic process will minimize perceptions of favoritism.
# Tip- 7 Bring your Area of Expertise
As soon as you set the management plans for your business entity, the next thing is to allow each partner to be an expert in his or her own category or skills. If one of your family is good at the accounts, then it is better to give them all the financial work and bank records. It will not only save your money for hiring bookkeepers for this, but it will also create a balanced business relationship, and prevent arguments when crucial decisions need to be made.
# Tip-8 Broad Perspectives
The process of decision making for running a family business can sometimes get restricted. In order to get creative thinking and fresh ideas for your business ideas, you can seek guidance from outside advisors who are not affiliated with any family member.
There might be chances that the decision from one of your family member gets lost in the tangled web of family relationships. Broadening perspectives from seeking advice from people will not only help you in incorporating new ideas, but it can also be an excellent way to give your business a reality check.
# Tip- 9 Keep Family Dynamics Outside
The most common issue in a family-owned business is emphasizing too much on “family” and not enough on “business.” Hence, it leads to the situation where several companies can’t maintain the balance between the professional demands and family dynamics.
In order to get your business off the ground, you need to separate the professional and personal relationships well. Never let family disharmony tempt you into making unjust professional decisions.
You can also set a rule at family gatherings and holidays to not discuss work-related issues. Once you master this, your workplace and home will be happier places.
# Tip- 10 Create a Succession Plan
And last but not least, develop a succession plan for your business entity in order to steer away from any future hassles. The succession plan should include all the details of how you are working and when you will pass off the business to your younger generation.
You can also add a sound financial plan for the company, set a date for retirement, establish a timetable for training new management, outline any role the founders will continue to play, and arrange for the control of cash flow.
It is complicated enough for running a business without having the pitfalls and potential baggage of family relationships. But running a family-owned business have some significant advantages over others which that cannot be denied, with a dedicated pool of people ready to stand behind your effort.
If your startup is a family business, you’ll need to take extra steps to avoid burning out, ensure on-the-job harmony and attract advice from business experts outside the family circle.