When we are talking about the family business, the first thing which comes to mind is the American Dream. And what could be wrong with “the Dream”?
Is there any chance of failing? Some family businesses are successful, and many fall apart. The principal question is how to create a family business that will prosper.
Focusing on the successful examples, we’ve gathered the best tips for those who aim at building a prosperous family business.
Do Not Neglect the Formalities and Sign the Agreements
Learn as much as possible about successful businesses, and take your lessons. What are the differences between a family business and a classical one? There are many, but this is not a lack of legal agreement, for sure.
Starting from the very idea, record and document everything. Life is an unpredictable thing, and you don’t know what expects you and your partners.
Drawing up an agreement on partnership or cooperation will encourage participants to do their job efficiently, even if things get really bad.
In such an agreement, it is essential to figure out not only your responsibilities but also such abstract things as a company’s mission statement, business goals, values, and so on. Do not forget to include the approximate salary levels, schedules, vacations, and other stuff related to company management.
Go on ahead and determine how will fateful decisions be made? What if one of the partners wants to sell the company? What will happen in case of divorce of the spouses? Yes, this is not a very pleasant and comfortable conversation for the family. Still, it is better to discuss these issues in advance and prevent unnecessary negative emotions.
Examine the Field You Want to Open a Business In
The most common mistake of desperate romantics who wish to open a business in the area they are passionate about is having a lack of knowledge about the field.
Of course, they do know everything about the process of product creation. They may even have an idea of how to deliver services to make clients satisfied with the results. That is to say, they are at the forefront, ignoring what goes on behind the scenes.
Before putting all your savings into an idea conceived around a dinner table, you should do ground research. You may even want to order a custom research paper from a trustworthy essay writing service on your business area, market situation, and so on. Such a slight investment will save you a lot of money, and most likely preserve your actual funds.
Do Not Mix Personal Income with Business Profit
Owners of small enterprises invest a lot in business development. At times it can seem that private funds and working finances are inseparable.
Nevertheless, it is better to create a separate bank account for family use and another one for your company. Such a step will ease the calculations and accounting, and you will see its benefits in perspective.
Treat Everyone the Same Way
It happens that sometimes, a preference for a particular job position is given to a relative, regardless of one’s skills, abilities, and work experience.
A family business cannot afford to hire people who do not contribute fully to the common goal. Every person has its own strengths and weaknesses, so considering these features while delegating part of work to a third party or hiring a family business advisory may be a good idea.
Chances are that in your family, there are hardly any specialists in all areas. Sooner or later, you will have to hire a person “from the outside.”
Nevertheless, everyone should be treated equally in matters of hiring, salary, and raising. A special attitude towards family members will demotivate other employees and create a tense working environment. Here are a few rules regarding recruiting in a family business:
- All family members must have extensive job experience in the field;
- Everyone must have the appropriate qualifications;
- The remuneration of family members should not be higher than of other employees;
- Do not force family members to join the business.
Separate Personal and Working Time
A lot of business owners tend to spend all their free time working. What happens if all your family could be defined as those “business owners”?
Most probably, your in-house communication is already limited to company issues, and that is just an establishment stage! What’s next?
Make it a rule not to discuss work-related issues and deals at a family dinner, on weekends or during vacations. It’s okay if you occasionally have to break these rules. Devote a few minutes to resolving the issue and switch back to family leisure. If you find yourself having to handle the technical side of your business a lot, like website issues or cybersecurity for example, you might be best off getting IT support to help out.
Differentiating personal and business matters may seem very hard when your company is your life. Still, this rule must be strictly adhered to if you do not want your family business to end on its first generation.
Once you have decided on building a successful family business, your life may change significantly.
Some business owners pay a too high price for their desire to bind family and money. Nevertheless, there are dozens of success stories when a family’s passion became an occupation of a lifetime for all the members.
Make it your story as well!
All the pointers are good and well explained and yes it’s important for everyone to spend time with family and recreate some moments along with working no matter if it’s a family business too.
Very helpful article and thanks for sharing.