By Patricia Lopez
Today, many people are looking into starting a business with their families. Starting a family business can be a source of pride, and family members who are truly dedicated to the company can be excellent assets. However, starting a family business isn’t always easy. Personal relationships are hard to disentangle from business relationships. Some family members may feel that they have a guaranteed job and don’t have to work as hard as regular employees.
Ali Zar offers seven tips for running a business with your family, from practical considerations to succession planning.
1. Be Aware of Family Conflicts
You should be aware of emotional difficulties that your potential family employees could have with one another as much as possible. Issues from decades ago have a way of rising to the surface in a new business’s high-pressure environment. For example, if your mother and your aunt fought years ago about money, it may come to the forefront again when financial situations are tight in your company.
2. Ensuring Family Employee Performance
Firing a family member for poor performance can also lead to long-lasting family rifts. However, you don’t have to feel trapped in your business. Make sure that your family employees understand that they will be treated equitably with your non-family employees. Emphasize that everyone is there to do their jobs, not to socialize, and collect a “guaranteed” salary as part of the company.
3. Chain of Command
As much as possible, try not to put parents in charge of their children, and vice versa. This could help cut down on some of the long-standing family conflicts waiting their turn to reemerge.
In a family business, there are always multiple roles to be played. A person in your business may be your parent, your boss, a board member, a co-owner, or a trustee. You may not be sure who you’re talking to at any point in time, and there could be misunderstandings that stem from these problems.
4. Communication Is Key
Communication is huge in running a family business. There is always a temptation to sit back and do things in the way they’ve always been done. Family members need to communicate with each other about what is and isn’t working. They also need to keep conversations about the business on a non-emotional level as much as possible.
5. Succession Planning
As much as possible, succession planning should be done well in advance of the business leader’s death or retirement. This gives other family members the chance to get over their disappointment when they have not been named the next leader, and it gives the leader an excellent opportunity to do on-the-job training with their successor.
Older generations may not want to get off the playing field. This can make it hard for younger people to know where their place is in the business. As much as possible, encourage older business members to think about succession planning quite early on.
6. Fighting Nepotism
In a family business, fighting nepotism can be an uphill battle. Of course, you are hiring some people because they are family, but you also need to treat them fairly as employees. It’s possible to overpay and overpromote family members whose work doesn’t line up with their compensation. It’s also possible to underpay and underpromote people who deserve more recognition.
One of the best ways to fight nepotism problems is by having strong employment policies in place. This will keep supervisors from practicing too much favoritism and making hard-working, underpaid employees resentful about their jobs.
Ali Zar cautions that an emotional outburst can disturb a company for months or years, so it is best to try to work through all of these issues before they can come to a head.
7. Work Outside the Family Business First
A young person’s first job shouldn’t be with the family business. Give them a chance to get used to the real world before coming into the possibly cushy environment of a family-business job. They will learn to be respectful and productive employees and to rise or fall on their own merits.
Why Some Family Businesses Succeed While Others Fail
The formula for family business success doesn’t have to be a mystery. Businesses that are run as much like a non-family enterprise as possible have the best chance of survival. This isn’t to say that running a family business is always a disadvantage. With family members in-house, you will have a loyal workforce that will stay with you even if you go through financial difficulties and they have to work for a short time at a lower pay rate or even without pay. That would never work with regular employees.
Healthy family relationships don’t have to suffer, either. By keeping personal disputes out of the workplace, you will be able to keep your company running smoothly for years and possibly generations to come.
Ali Zar emphasizes that family members need to be treated like any other employee when paying, responsibilities, and discipline. Letting certain family members slack off while others work hard will only bring dangerous levels of resentment.
