8 KEYS TO RUNNING A FAMILY BUSINESS
Love your sister and want to start a business with her? Or have your adult kids enter your small business? How about asking your parents to help with your start-up?
Running a business with family members can be great — or not. It can present some sticky situations — just ask the Trumps.
Before you decide to work with family in your small business, remember these eight tips to help make sure that both your business and your family relationships survive.
Running a small business with your family, you may be tempted to keep things very informal — don’t.
1 Decide who does which job. In a small business, typically everyone wears several hats and pitches in whenever a job needs to get done. But it’s still a good idea to make sure you spell out everyone’s primary role — whether sales, administration, financial management, whatever. If you’re trying to groom the next generation, you may want to rotate jobs from time to time, but give each person an area of responsibility, a job description and title.
2 Make sure everyone works. I had a friend who owned a used car dealership. His teenage son got a summer job washing dishes at a local restaurant for $9 an hour. The father didn’t like the idea of his kid working at a job like that, so he hired him to “work” at his dealership for $25 an hour. The problem? The kid didn’t actually do anything. He would have been better off learning the value of
hard work washing dishes. Everyone who works for the family business should actually work, not just get a paycheck. Even the teenagers.
3 Put it in writing. Your brother-in-law wants to end every workday at 2 p.m. to go surfing? If everyone agrees to it, that might be fine. Should he make as much money as you do, working 10-hour days, shouldering more of the burden of running the family small business? It depends. Perhaps he provided all the start-up money, brings in the biggest customers, has to travel 70% of the time. Whatever agreements you come to, make sure you put them in writing to reduce misunderstandings and conflict.
4 Decide how you’ll make decisions. Having a clear and fair decision-making process avoids lots of fights and bad feelings among family members.
This doesn’t necessarily mean you have to make all decisions by consensus or by a vote — as the owner, you may want to retain all critically important decisions yourself — just be clear about what types of decisions others can make, and then let them make them.
5 Conduct performance reviews. And be objective and constructive about it. Do this at the office, not at home. Leave anything that happened outside of the office out of performance reviews.
6 Keep family dynamics out of the workplace. Keep it professional when you walk through the office door. If you’re the parent, listen to your kids’ ideas. If you’re the kid, don’t write off your parents’ ideas as just old-fashioned. Try not to bring negative old patterns of family interaction into the workplace. As with any successful
small business, be respectful of your co-workers.
7 Work toward the best but plan for the worst. Things could go wrong. Your business may fail, you may have to fire your sister, you may decide you’d enjoy working on your own or you may divorce your business partner, who happens to be your husband. Even if your spouse isn’t involved in the family business, he or she may be entitled to a piece of the business in the event of a divorce. If you have a plan, you won’t be scrambling if a worst-case scenario comes to pass.
8 Come up with a succession plan. You may want your company to bear your name 100 years from now, but does the rest of your family? They might not want to continue running the business, they may not be capable of doing so, or on the flip side, some of them may fight over who gets control. Come up with a plan now. Like writing a will, people don’t want to talk about this but it needs to be done.