In general, good businessmen are like good parents. They try to make their employees feel loved and valued, they keep them out of bad habits, and they don’t put too much of a burden on them because it hurts everyone (reduces financial results, as far as business is concerned).
Mixing love and money is always difficult, but especially in the family business. You have to have solid skills here, both business and family.
When starting a business with a wife/husband, parents, siblings or children, the founder often faces additional challenges. Statistics show, that nearly half of family business owners (43 %) have no succession plan in place. At the start-up stage of a family business, these dangers are especially acute.
Family members often join a new business without a clear idea of their role thereafter. If you involve relatives in your business, you need to be clear about compensation, exit plans and many other details right away before this becomes a problem.
Below I give strategies to create the right balance in the family business.
It’s easy for relatives to talk about the family business around the clock. But mixing business, personal and family life ultimately leads to a confusing brew. So limit any discussion of business outside the office. It doesn’t always work, but at least it helps cut them down.
Establish clear and regular discussion procedures
Problems and differences of opinion are inevitable. You may have already encountered them. Weekly meetings will help you identify and resolve any disputes and disagreements in a timely manner.
Separate roles and responsibilities
Different family members should deal with issues according to their skills and inclinations, but roles should be assigned in advance to avoid conflicts. Serious decisions can be made together, but collegial handling of minor issues will sink a business. The most important thing is that your Purpose is shared. And don’t strive to do what you can’t do, what you’re not good at, if your spouse can handle it more effectively. Then together you will achieve a lot more than competing and getting in each other’s way. Husband and wife can make the perfect team, where everyone complements each other. It’s all different roles, different responsibilities. And each person has a different end! But in essence they are one team!
Thus, by sharing your roles and responsibilities, you can be “in two places at once”. This doubles the effectiveness of the team and your business.
Business is business
A typical family business trap is too much emphasis on family and not enough on business. The characteristics of a healthy business are not always compatible with family harmony and you have to be prepared for that.
Identify the benefits of the family business specifically
The family business has unique benefits. First and foremost is access to the human potential of each family member. You combine your skills and efforts into one big picture – for the benefit of your family. This can be the key to survival because it allows you to save on employee salaries or get an emergency loan in case of need.
A fair approach
While many experts recommend avoiding hiring relatives altogether, this results in the loss of the unique attributes that are specific to family businesses. And skilled professionals who are family members are also a huge asset to your business. But avoid favoritism. Salaries, promotions, work schedules, criticism and rewards should be impartial to all employees regardless of family ties.
Seal the working relationship
This is especially important for relatives involved in the business without a clear plan for how they will get out of it. To avoid misunderstandings and difficult situations in the future, put in writing the amount of compensation, share of ownership, responsibilities and other issues.
You should not seek to provide “interesting” positions for relatives
You should not become a source of jobs for your children and other relatives. Jobs should be distributed based on the applicants’ knowledge and skills, not their family connections.
Clearly define the management hierarchy
Often family members who have a stake in the business believe they can reprimand employees and hold them accountable to them. This behavior naturally leads to dissatisfaction among subordinates.
Determine a strategy for promoting your business
Defining a general communication strategy involves a detailed description of the fundamental points, from goals to the advertising budget. The key market segment to which the impact of marketing materials will be directed, and the target audience is selected. The goals of communication are specified (stimulating the purchase of the product, creating awareness of it, etc.) and media indicators (channels used, coverage of the audience, etc.). To promote the family business accessible marketing tools and software are used. It is worth looking for various free software, such as in this article, to reduce costs. The effectiveness criteria of the advertising and information campaign and the total budget to be spent on its implementation are defined taking into account the above-mentioned points.
The decision-making process in a family business often proves to be too closed. New ideas and creative thinking can’t always break through the tangled networks of family relationships. Bringing in outside advisors who are not affiliated with anyone in the family or checking new ideas here is a good way to give the business an evaluation.
A development plan
A family business without a long-term development plan is just asking for trouble. The plan should clarify the details of how the baton of running the business will be passed on to the next generation. The financial side when family members leave should also be determined. Such a plan cannot be done without the help of an outside professional.
Have third-party experience with employees
Involve your children in the business only if they already have 3-5 years of experience with another company. Better yet, in a different field than your business. This will give them valuable insight into how other, unrelated family businesses work.
Mechanisms for managing a family business exist. But if they are adopted, their specific content will have to be developed. And there are no recipes! Everything depends on the specific features of this or that family and this or that business belonging to it.