Growing Your Family Business
The camaraderie, love, trust and joy of building a lasting legacy brings special rewards to family businesses. Yet owning and operating a family business can be challenging. With less than 1/3 of businesses lasting past the first generation and only 12% surviving to the third generation how can you be sure your business won’t be one of these fatalities?
The following are recommendations on how to succeed and link one generation to the next:
Run Your Family Business From Your Head Not Your Heart – Be aware of your key employees. If most are family members, things can get get sloppy, especially when it comes to compliance and maintaining accurate and up to date financials.
Succession Plan is a Must — Your business survival depends on creating a succession plan that states exit strategies. Yet according to statistics, most family businesses have no plan for succession. A succession plan is a must – get professional help, ie: your accountant, lawyer, key employees and family members to help create it and list the details on who will take on the key roles for continuity of the business.
Develop Leadership Among All Employees — Conduct regular performance reviews for family and non family employees on a quarterly or monthly basis. Create in-house training for employees, both family members and non family members to develop their strengths. Outside professional facilitators can help with this. This will streamline the succession process.
Separate Family and Business Expenses — Don’t make loans to family members from the company or let them write off personal expenses as a business expense. This can foster resentment among non family members, even if it doesn’t get you in trouble with the IRS.
No Favoritism — If your key non family members feel they have no chance to move up in the business, they will become unmotivated and resentful. Be clear on the promotional path for family members and non family member employees.
Boundaries — Set boundaries ie: there is no discussion about business after hours, or at family and holiday gatherings. This will maintain harmony and show respect for those who are in and not in the family business.
Good Communication — Don’t keep non family members in the dark. Hold regular meetings and update all employees on newsworthy information about the business.
Make No Guarantees — Hiring decisions are based on the business, not the needs of the family. Everyone should have an opportunity to grow within the company, but not everyone is suited to continue. Have a professional help you structure your business so you are clear who can and cannot have ownership.
Resolve Conflicts — Conflicts within the family can flare up and infect family relationships. A plan must be developed for dealing with business related disagreements between family members, both who work in the business and those who do not.
Recruit Outside Help — Whether you are trying to resolve business decisions or deal with personal conflicts getting advice from outside professionals ie: mediators, or your board of directors/advisors will give you much needed perspective.
Having founded, owned and operated the Family Business Council of Greater New York for more than 12 years, I have a wealth of knowledge in working with family owned businesses. If you are interested in an outside objective opinion on how to structure family members and/or non family key employees for growth within the business I can help.
Email firstname.lastname@example.org for your complimentary consultation.