What is one tip for running a successful family business?
To help you understand what it takes to run a family business, we asked thought leaders with family business experience this question for their best insights. From embracing the blurred lines to putting the success of the business over family issues, there are several tips that may help you run a successful family business.
Here are 10 tips to run a successful family business:
- Embrace the Blurred-Lines
- Find the Best Lender
- Keep It Formal
- Create a Succession Strategy
- Establish Clear Responsibilities
- Get Out of the Family Bubble
- Understand Individual Roles but Be Collaborative
- Be a Role Model in the Workplace
- Gain Business Experience Elsewhere First
- Success of the Business Over Family Issues
Embrace the Blurred-Lines
Many couples that run a business together have a policy that they won’t talk about the business at certain times like in the evenings, over dinner, or on vacation. We have the opposite philosophy. My husband and I talk about our business all the time. This helps our marriage since we have the family firm in common. We still have a balanced business relationship: The domestic tasks get done and we talk about other topics like our children. However, by feeling free to talk about our business during waking hours, we spend more time on our business so we are more productive and we spend more time discussing a common interest, the family firm, that we both enjoy.
Janice Wald, Mostly Blogging
Find the Best Lender
Seek recommendations and do your own research on the best lenders for your business. When it comes time to grow and expand your family business, it is important to be able to access the necessary capital to realize your goals. At LendThrive, we offer fixed and affordable low-interest loans for our approved borrowers. Having access to affordable loans can assist with daily operations or in the growth and expansion of your family-owned business.
Allan Switalski, LendThrive
Keep It Formal
I strongly advise that you document every agreement or contract. No matter how much you love each other, disagreements can inevitably arise in a business. Handshake agreements must be avoided. In family enterprises, formalized contracts, share issuances, job descriptions, and operational procedures are much more important, and depending just on spoken agreements can lead to disasters and disagreements. In a family firm, entrepreneurs are often hesitant to take this step because it may appear to be a sign of distrust. A written, documented business partnership agreement, on the other hand, is simply smart business that protects all parties involved. Make sure everything is in writing before you sign up for any project to avoid any potential family issues. These documents will assist you in navigating both positive and negative consequences.
Edward Mellett, Wikijob
Create a Succession Strategy
Working with family members may be difficult, and few decisions are as difficult as deciding who will take your position. Remember that the goal of a succession plan is to do what is best for the company’s future, its customers, vendors, and workers, not for a specific family member. The plan should specify how and when the torch will be passed on to the next generation. It must be a financially solid arrangement for both the company and the retiring family members. Knowing you’ve expressed your vision properly will assist others in understanding their roles in the business and give you the confidence to make the difficult decisions ahead.
Axel Hernborg, Tripplo.com
Establish Clear Responsibilities
There is no one-size-fits-all answer to this question, as the success of a family business will depend on the specific dynamics and individual personalities within the family. However, here are tried and true tips that may help:
1. Establish clear roles and responsibilities for each family member, and stick to them. This will help avoid confusion and ensure that everyone knows their role within the company.
2. Keep communication open and honest among family members. This will help prevent misunderstandings and ensure that everyone is on the same page.
3. Foster a sense of teamwork among family members. Working together towards a common goal will strengthen familial bonds while also helping the business thrive.
Claire Westbrook, LSAT Prep Hero
Get Out of the Family Bubble
Running and being part of a family-owned business can be hard, with many layers and dynamics we don’t see in the typical corporate businesses, one of which is a lack of structure and outside influence. Many family businesses span multiple generations and have very high employee retention because they “feel” like part of the family, which can be great in some ways and also a hindrance in others.
One way to influence needed change is to bring in outside consultants or advisors and hire new talent (NOT family) who have myriad experiences and different workplaces to pull from to infuse new ideas, processes, and needed changes. I’ve seen great success when an outsider shares the idea or feedback vs a family member, it sparks conversation and there is no threat to the family dynamics even if the idea is squashed.
Barbie Winterbottom, the Business of HR
Understand Individual Roles but Be Collaborative
I think the key to running a successful family business, is identifying and understanding everyone’s role and strengths so that you can collaborate efficiently. Diversity in skill and thought is integral to a thriving business, and so it’s important to create an environment where everyone’s opinions and ideas are valued. Because of the comfortability, we have with family, it’s particularly important to be intentional when communicating. You need to make sure that you’re not getting in the way of each other and that instead, you’re working together in a way that is beneficial to the business. I feel we do a great job of fostering this kind of environment at AEC Alarms.
Yat-Cheong Au, AEC Alarms
Be a Role Model in the Workplace
The family business is a reflection of its founder, and to build a strong corporation that can last into future generations, current leadership must be conscious of how employees perceive their actions. Family businesses need clear rules for employees and strict codes of conduct, especially when creating an inclusive atmosphere that values diversity. Employees will mimic the behaviors they see leaders engaging in so if employers want younger generations to enter the workforce voluntarily, they must demonstrate good professional conduct towards peers and subordinates.
Sam Santa, Zeitholz
Gain Business Experience Elsewhere First
The key to ensuring a successful family business is by requiring all family members involved to gain business experience elsewhere. They should not gain their first business experience by working in the family business. It may cause family conflicts as well as business failure. By gaining direct experience elsewhere, they acquire insights into what it’s like to run a business, which can help them rethink their perspectives on so many facets of business and customer service. Each family member will have an understanding of whether working in a family-run business is something they can thrive in and be passionate about. It is more likely for a business to prosper when all family members desire to be involved rather than because it is expected of them.
David Bitton, Doorloop
Success of the Business Over Family Issues
The key to having a successful family business is to take advantage of the commitment and loyalty of family members serving as employees while at the same time putting the welfare of the business above family concerns that can prove distracting and unproductive. In order to pull this off, the head of the family business should adopt an “owner’s mindset,” which involves executing a plan designed to prioritize company growth. This means letting go of people and practices that fail to add value to the business and being open to the idea of developing talent outside the family. The leader of a family business should make sure that all employees are on the same page and that they agree with the company’s core values, mission statement, and strategic vision. It’s also important to use a leadership style that will encourage participation and communication among family members.
Kris Lippi, I Sold My House