A lot of people turn to their family when they have a great idea for starting a business. In fact, there are millions and millions of family companies all around the world. However, while family businesses can be a great sense of pride and provide you with a great chance to work with the people you love, they also present a unique set of challenges.
A family run business can be more difficult to manage because there are personal relationships involved. If you run a family firm, or you are thinking about doing so, read on for some top tips to ensure everything runs smoothly.
Don’t provide ‘sympathy’ jobs for members of your family – It can be very tempting to create a job for someone in your family simply for the sake of getting them out of unemployment. However, you need to ensure that every person you employ, family or not, adds value to the business. Therefore, while there is nothing wrong with hiring a family member for a particular role, make certain that they actually have the skill set required to do the job well. If they don’t, tell them to acquire the skills and then you will take them on.
You can even do an online MBA degree today, so they can easily get the qualifications they require from the comfort of their own home. This is not unreasonable, as you are protecting your business yet leaving the door open for family members if they attain the skills needed.
Stick to formalized contracts over handshake agreements – This is important for every type of business, but especially family companies. Instead of handshake agreements, you need to implement official operating procedures, job descriptions, share issuances, and formalized contracts. You are simply asking for a disaster to occur if you rely on handshake agreements, as it leaves room for interpretation, and can easily cause rifts.
Keep business life and personal life separate – Mixing the two is never advised. When outside of the workplace, try to limit the hours you discuss your business. And vice versa; avoid talking about family problems while at work. This can be more difficult than you expect. However, it is really important to stick to this at all times. Do not make any exceptions.
Hire a chartered accountant – It is advisable to use the services of an accountant. This ensures that all monetary matters will be in the hands of a professional. Not only will everything be handled effectively, but also you can be confident that nothing untoward is going on in regards to this area of your business.
The last thing you want to do is create the potential for friction to occur over money. An accountant is going to have the best interests of your business at heart, as opposed to individual interests.
Don’t create two classes of employees – A lot of family run business owners are guilty of giving their family special treatment, and this can make non-family employees feel undervalued and unmotivated. This can also make non-family employees feel as if they are in a dead-end job, as they know that family and friends are more likely to get a promotion over them, and thus your staff retention levels will suffer.
Communicate on a regular basis – A lack of communication can be one of the biggest reasons why family businesses fall apart. If you don’t talk regularly, problems will manifest and get ten times worse. This is why it is a good idea to hold weekly meetings that are entirely focused on strategic, in-depth business discussions.
If you follow the six tips that have been provided in this blog post, you will have a much better chance of ensuring your family business is run smoothly. By separating family life from personal life, setting up formalized contracts, and ensuring family members do not get special treatment; you are likely to avoid any issues. Plus, by going into your business and being fully aware of the unique set of challenges, you will be bettered prepared.
A lot of business owners are ignorant of the problems that could arise, and so they are not best equipped to deal with any sort of frictions. Hopefully, you won’t have this problem now!