Sometimes we play too long trying to balance our desire to spend more time with family and our responsibilities at work. And that is when a family business appears.
A family business is a great way to bring several cultural elements – such as small business and family – together in a proper way that reinforces both.
But things are usually not so optimistic. A “proud tradition” can have a high risk of failure. With each generation of the family, fewer family businesses remain, and by the third generation, only 3 to 5 percent of such businesses survive.
On the other hand, some of the biggest success stories in business history started as family businesses.
So what are the key points to avoid failure and reach success while running a family business?
The advantages of family businessing
According to research by Boston Consulting Group, 30 percent of all businesses with more than a billion dollars in sales are family-run.
Walmart, Samsung, Nike and other giants all started as (or even remain) family businesses.
So what are the key points of success in family business?
Because family members are involved, key stakeholders have a different kind of commitment to the company than may be found in non-family businesses. Thus leadership tends to be stable and team members tend to be more flexible.
Given the distinctive nature of such companies, it’s important to be mindful of the most effective tactics to enable your family business to thrive for generations to come.
Here are a few simple things you should keep in mind if you want to not only maintain your family business, but grow it.
Keep everything formal
Never ignore this point. It helps keep business processes well-organized which is quite important in case of business reviews, for example.
Avoid ‘handshake agreements’. Yes, these are your relatives and you can trust them. But no one is safe from simple inaccuracy or mistakes. Moreover, documentation reminds all the members that this is a real business, not just a family game. Formalized contracts, share issuances, job descriptions and operating procedures are actually very critical in family businesses. Relying only on voiced agreements opens doors for disasters and conflicts.
Decide who is “the boss”
Actually, this is all about correct roles assignment. The worse situations are when several members become advisors on all issues.
Make it clear which decisions can be made together, because a debate over each little move will swamp down the family business and ultimately lead to failure.
Try not to enter the area of other members too often. Conduct regular meetings to discuss mutual tasks and assign roles.
Keep family dynamics outside
The most important and the less feasible point.
First of all, separate personal and professional relations. And never let family arguments affect professional decisions.
For example, if you are a parent, listen to your kids’ ideas, and don’t use your “parental power”. This way you will not only build professional relations in your business, but also show respect and love to your family partners.
Remember, there is no need to emphasize too much on showing everyone that you are a ‘FAMILY BUSINESS’. You foremost goal is to be known as a qualitative business.
PDFfiller’s team is ready to follow your business steps and support your desire to build strong business partnership as well as to stay close to your family. We wish for you to enjoy the opportunity of doing a family business (or avoiding it if it makes things too tricky).