Does a family run business sound too good to be true? Well, it’s not!
In fact, it may surprise you to hear that “about 90% of all U.S. businesses are family-owned or controlled by a family,” according to Forbes. With so many of our clients expressing the desire to one day work with their kids, we thought it would be useful to share some tips on how to run a successful family business.
Put it in Writing
This may be one of the most important aspects of working in, and running, a family business. “Put it in writing” applies to nearly everything in the operations of the business. From contracts to job descriptions to performance metrics, it is in the best interest of the business, and ultimately, for each employee and member of the family, to have things clearly outlined in writing at every step of the way.
When you ensure that everything is in writing, it creates less room for interpretation and less ambiguity than if you simply “go with the flow.” Take, for instance, a scenario in which you run a business, and you ask your brother to head up your sales department. He’s gregarious, smart, and people naturally gravitate towards him. But some things you need to hammer out include: Is he responsible for generating his own leads? How much, if any, of his compensation is base salary versus commission? Outlining details like these are critical for any job in a company, but more so in a family organization, since ambiguity can lead to a fractured understanding of who is responsible for what, causing unnecessary tension in the business and with the family.
When it comes to evaluating the performance of a team member, clearly define what sorts of performance metrics will be assessed, and how frequently. It’s important to remember that the transparency goes both ways: not only does it give the “leader” of the business a rubric by which to evaluate the employees (and family members,) but it also gives employees a well-defined “road map” of their role and responsibilities.
Understand Family Members’ Goals and Aspirations
In a family business, it is easy to “drop” someone into an immediately needed role to stay afloat. This approach can certainly work in the short-term, but if not managed properly, it can create strife within the business and the family. This is why it is important to actively engage your employee/family members to ask them what their career goals and aspirations are – and if they are interested in staying within the organization! Having open, direct conversations about the direction they see themselves taking in the family business goes a long way to establishing trust and centering a conversation around an individual, rather than the family as a whole.
These conversations are also great for another reason: it may turn out that a member of your family, who is working for the organization, is either not interested in continuing at the company or perhaps there is no immediate role for their current skill set or future aspirations. These conversations about goals and dreams can reveal these gaps. Open dialogue has the ability to mitigate bottled up feelings of being in a dead-end job or being in a position that doesn’t fully utilize a person’s skill sets.
Go Outside the Family Tree
Working as a family has many amazing attributes. There is an inherent trust and understanding amongst family members, which can often serve businesses very well. Additionally, family members tend to take a more long-term approach to the business, because they have a vision of passing the successful company down to the next generation of family members. However, there are some pitfalls that accompany family businesses.
So most experts feel that it’s a good idea for a family business to create a board or bring influential members outside of the direct family unit to provide guidance, differing opinions, and ultimately, a different way of viewing the business. Having someone with a different background will “round out” the family-side of things and direct the business side in a very deliberate manner.
Know when to “Turn it Off”
When you have a family business, the lines between professional and personal can seem perpetually blurred. Set some boundaries with your family around these times. After all, no one wants every family cookout to be a “company” picnic. Separating business life from family life will drastically improve both business operations and quality of home life when the two can stay (mostly) separate.
One tip on how to separate the two are: don’t “talk shop” at mealtimes. This one is simple but not always easy to stick to. Mealtimes with family are a great opportunity to talk about things other than work. What are the kids up to? What fun getaways can you plan as a family? Keep your work talk to a minimum at night if possible. If there is something you’re dying to talk about, write it down, and bring it up the next business day. Obviously, some of the needs of the business will be so important that they’ll either need to be discussed after-hours or at a meal, but hopefully these are few and far between.
Running a family business can be one of the most fulfilling things in life. Or it can damage relationships to an irrevocable degree. Setting up proper rules, boundaries, and guidelines can potentially help alleviate a little less stress and confusion.
Do you run a family business? I would love to hear your tips and tricks to running a successful operation!
And don’t forget to listen to Jeremy Bollington’s words of wisdom on how he handles his family businesses that he runs with his wife Elaine.
This post originally appeared May 2021.