Four more ways to keep your family business from becoming a family feud
In an earlier blog, I talked about the importance of family-run companies having a business plan; setting regular, formalized meetings; maintaining good, financial documents and welcoming outside expertise. The idea is to make the most of your family business’ strengths, like shared commitment and generational heritage, while avoiding unnecessary drama.
So, whether you and your spouse are both dentists or you and your siblings are plumbers who inherited the family shop, here are four more considerations—including a caution—to build upon those earlier points and support your company’s success.
Tips to help your family business thrive:
Assess your motivations – Some people want a legacy to pass onto their children. Others continue a family business out of obligation to their elders. Understanding your intentions will help you prepare for and deal with roadblocks. Realizing your child may choose a different career, for example, can guide you in creating a backup succession plan and exit strategy.
Recognize contributions and compensate people fairly – There’s a difference between running occasional errands and serving as a full-time receptionist. In family-run businesses these lines can easily get blurred, resulting in hurt feelings and resentment. That’s why it’s so important to codify job titles, performance standards and compensation—and to consistently apply them to family and non-family members of your team.
Never borrow from the company to assist a family member – Treating your business like a bank can put leaders in a position of playing favorites and may strain the company’s reserves, not to mention relationships. It’s better to avoid the temptation altogether.
Develop a succession plan and revisit it often – Healthy organizations create equal opportunities for people to learn and advance. Individual aptitude and interest play a role too. A child who wants to follow in your footsteps in high school may discover new interests in college, or may not fit the qualifications outlined earlier. A knowledgeable banker can help you understand and structure financing if needed to support your exit strategy or other goals along the way.
To learn more about this and related topics, see part one of our Family Business blog or read about Succession Planning.