Family-owned businesses make up a great number of small businesses that start every year. They operate a pretty unique business model with its unique advantages and setbacks. Starting a business endeavor with those dear to our hearts should give us the trust and confidence that they will put in as much passion and dedication as is needed to see the company thrive. This is especially needed in the early delicate phase of the business starting up.
Unfortunately, this is not always the case. Yes, they are our family, and of course, we love them, but this is a business, and conflicting interests are bound to arise. Now, you don’t want business jeopardizing interpersonal relationships or familial relationships hindering the prosperity of your business either.
Without proper business management measures put in place, a lot could go awry. Take note of these tips for the effective management of your family business.
It’s a Business; Treat It Like One
Many family businesses that fail in their early years fall prey to this; they place too little emphasis on the business side of things and maybe a little too much on the family.
Familial and business interests may not always align, so you should be prepared to tackle those situations head-on when they arise.
Get Formal with Business Relations
Family members can be so intrigued by the idea of embarking on a new business venture that they commit without a clear view of what the expectations are of them.
To stay clear of any miscommunication and hard feelings that may come up in the future, agreements regarding ownership, compensation, and responsibilities should be put into writing. Helpful hints that can help you set up your family business as an organization can be found here.
Hire Personnel, Not the Person
Company positions should be occupied by people who have the necessary skillset and credentials to perform in that position.
A common misapprehension among many family-owned businesses is filling job openings with family members who lack the desire, interest, or qualifications to exceed in the role. No matter the type of business you operate, this model seldom works out. Read more about How outsourcing React Native development can help you save cost and time.
Clarify Job Descriptions
You shouldn’t assume just because they are family that they have all the knowledge regarding how a business functions. Be sure to articulate the key task and responsibilities that fall on each office, and necessary training and equipment should be provided when needed.
Many times, situations will arise when you will have to put business objectives over familial relationships. This poses its challenges, but it’s critical to the longevity of any business.
If you have a family member that you think is performing poorly at their posts, weigh the pros and cons of keeping this person around. Do you think they should be let go? If you urgently need money, would you take a quick online loan or consider borrowing from your close friends or relatives? If you are settled on a decision, act on it immediately; waiting and elongating the matter only delays the inevitable.
Treat Family Members Fairly
Qualified family members can be an unequaled asset to your business, so maintain evenhandedness when dealing with matters regarding compensation, promotions, work schedules, pay scales, and criticism. Don’t lower or increase the standards for some family members more than others.