10 Essential Tips for Running a Family Business

A family business is not about giving job positions to your descendants and relatives, but about preserving something that took time and effort to build. It’s a company like any other, thriving on good professional relations and expertise. 

To make sure all family members understand this and have no hard feelings, you need to treat them as employees and not people you spend holidays with. In order to put aside personal disagreements, here are essential tips for running a family business for overcoming challenges.

Appoint decision-makers


If you run a business with family members, you all need to establish who has the final say during a decision-making process. It will create a clear management structure that won’t lead to conflicts between family members and their different opinions about what’s best.

As an alternative to appointing one person, you can turn decision-making into a joint effort when it comes to big choices. This will help you decide by voting or consensus, although you should keep the right to have a final say in crucial matters. 

Resist the need to micromanage family members


Micromanagement is something you see in family relations every day, but in a business environment, it’s unacceptable behavior. It’s a sign of distrust in the competence and professionalism of your family members, giving them a reason to feel inadequate to do their jobs. 

Instead, treat them as non-family employees and allow them to perform their tasks without you looking over their shoulder. One of the most important things in business, is trusting your employees, and that applies to family members, as well.

Don’t mix business and personal


The moment you step through the company’s door, the personal relationship you have with a family member stays there. It’s important to separate professional life from personal so your company can be free of drama that often comes with family relations. Always do what’s best for the business despite the conflicts in your family through just and impartial decisions. 

Work on communication


Good communication is the foundation of any relationship. It’s wrong to believe that because you know each other so well, you and a family member don’t need to talk things through. If you want this business relationship to work, you need to discuss with them all the details about their duties and specific projects. 

The same applies to any remarks you might have regarding their performance, no matter how uncomfortable that conversation might make you feel. To make things easier, use official methods of communication and be clear with your messages. Weekly meetings and encouraging different standpoints are a good start to develop a healthy business relationship with your family members.   

Be fair to family members


One of the most common mistakes is treating family members worse than other employees to dissuade everyone there’s favoritism in your company. Although understandable where this comes from, it’s a huge mistake. 

Favoritism is something you can avoid through equal treatment of all your employees, including family members. Avoid respecting different standards for a family which is above the expectations you have for non-related employees. 

Make an outside experience a requirement


Before you hire any family member, make it a requirement to come to you with previous experience at another company. It’s best if this company is doing business in an unrelated industry to yours so they can learn about different perspectives and widen their expertise. 

Three to five years of experience outside your company can help them appreciate the jobs you entrust them, as well as bring new ideas. They may also develop work ethics that they wouldn’t perceive as required when working for their family. 

Be professional


It may be called family business, but the fact remains that it’s business, so that’s how you should treat it. Relying too much on the family aspect can neglect some business ventures that would be good and profitable for the company. 

What you want for your business may not always be acceptable by your family, but staying professional is the only way to deal with presented opportunities. Instead of thinking about how your family would be seen based on your company, focus on how your business will be recognized regardless of your family. 

Formalize all business deals


Handshakes and verbal agreements may work outside the office, but when it comes to business — it’s best to formalize it all. Most people are not comfortable with this step because they don’t want to insult a family member since it can appear as mistrust. However, documented agreements
formalized by family lawyers are not about trust, but rather good business sense. 

They are much needed to avoid potential conflicts and misunderstandings that are common in the business world. So, have everything in writing before starting on a project or hiring a family member to maintain good business relations and outcomes.

Welcome innovative ideas


Being open to
innovative ideas is for everyone, regardless of them being family or not. If you only accept creativity from family members, other employees will see it as nepotism and feel dissatisfied. 

Encourage everyone at your company to suggest ideas and give feedback about projects and their realization. To make sure you are including all the key elements, employ people who are of different ages, cultures, languages, and backgrounds. This will bring fresh and diverse ideas to the table, paving a way for innovation and progress in your company. 

Have a succession plan in place


A succession plan is something you should have from the start to make sure that your company will be in good hands when you step down. It’s so important that your business may depend on it one day. 

Think of family members who would be a good fit to run the family business and make critical decisions in the future. Above all, take a look at your succession plan occasionally to make changes and additions so it’s always up to date with your wishes for the family business. 

The bottom line

It’s not easy to be at the head of any business, let alone a family-owned one. One of the essential tips for running a family business is to keep professional and personal separate. Act in the best interest of your company even if that’s not something that sits well with other family members. You may have to put in an extra effort to avoid conflicts and ensure harmony, but it will make your company stronger and more successful in the end.


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