The 11 Keys to Building a Family Business
Family is one of the most important aspects of our lives all over the world. When investing your time to build a business with the most trusted people in your circle, there are several factors that must be considered. Building a successful family business is hard work that will take patience, respect, and collaboration. For that hard work, you might go through you should know that family businesses have a significant edge over other businesses, as they have a deep understanding of their family members and how they work.
In this article, let’s talk about the 11 keys to helping you build a family business that will allow you to effectively balance both the family and the business.
Understand Your Individual Strengths
No individual carries the exact same knowledge, skills, and interests that can be applied to a business, not even twins.
In order to manage a family-owned business, there must be a clear understanding of what a certain family member can accomplish better than another member of the family. Dividing the workload into categories, organized by each individual family member, will lead to better efficiency and clarity in your family office.
Successful family companies have learned that they operate best when tasks that require specialized family members are left for them to handle on their own, but also offering a helping hand whenever possible is helpful. Taking advantage of one’s unique skills and resources for family business owners allows them to have an edge over their competitors.
Market Your Family
We have all heard of the advertising involved with family companies that seemingly let you know that they are “Family Owned”. These family businesses have found success in their business model that effectively utilized members to create the family enterprise that they are. Consumers love a family-owned company because we love our own family. Consumers are human beings that have a family and value their family relationships significantly.
That’s why you should follow the footsteps of successful family businesses and take pride in the work you do to build your family enterprise. Hop on social media and broadcast the story of your family’s endeavors and business progression. Regardless if you like them or not, look at the fame the Kardashian Family built by signing up to a reality TV show deal and by constantly building up one another on social media. The Kardashian/Jenner clan has built a family empire through marketing and communication that your family can also use to your advantage.
Establish Succession Plans
Succession plans are an uncomfortable yet very necessary topic when establishing the foundation and vision of your family business. Knowing that family ownership is not forever, means there must be a consideration of who the keys to the business will be passed down to in the younger generation. This decision-making must be agreed upon by most family members when the time comes for a transition to the next generation.
The next generation to carry the legacy of the family business will carry the tradition of building the business, but by no means will they follow the exact same steps the previous family head owner took. With every new generation comes a wave of fresh ideas that can at times jump-start the family business to new successes
Establishing who the business is being passed down to in the future generation requires thought and agreement by the majority of the family members.
Most family dynamics have a father/mother figure that runs the family business, but it does not always have to be as simple as handing the business down to son to grandson. Keep your family bias distant when making major decisions, as the future of a family’s business will run best by the most qualified and dedicated employees, that do not necessarily have to be related by blood.
Welcome Non-Family Employees
Non-family employees are often family friends in most small businesses, but at times, a new applicant will fit into a job description your business needs to be filled. Once these individuals become a member of your business, it is at the utmost importance to treat them as your extended family. Building a successful business is contingent on that all workers are buying into the vision that is shared by everyone. Make sure everyone understands that vision and put it in writing. Display it and update it often. Even if the family business was created to ultimately grow family wealth, let the non-family employee understand the perks they can achieve in attaining your aspirations.
Creating a welcoming culture is important in any working environment, but it holds a higher need for implementation when growing a family-owned operation. A non-family employee will see themselves as an outsider most times, making them feel less motivated and less inspired to contribute to the business’s vision. It is the job of every family employee to treat their non-family coworkers as one of their own, as it will ultimately create an inclusive culture leading to higher production and a high spirited attitude towards work.
Separate Leisure and Business
It is a luxury that family businesses are able to communicate business issues outside of the office, especially during the COVID-19 pandemic. However, failing to separate business time and personal time with family can lead to jaded relationships with different family members. Typically, families with strong relationships are the ones that aim to build a family business, however, their passion dies out when they are followed by talk of work wherever they go.
Stray from talking about business during personal celebratory events or funerals as these days are constituted on honoring individuals. Bringing up your business in these settings would be disrespectful and lead to unproductive discussions. There is a time and place for everything.
This COVID-19 pandemic has cast many family businesses more into the need for technology. As consumers have made the transition to online shopping, traditional family businesses must keep themselves relevant by using the most productive and newest technology.
As mentioned before, social media can be a game-changer for your family business as there are not as many family businesses online as there should be. Before the trend catches on to all the other family businesses in your industry, your business should build its prominence on a well-designed website, active social media profiles, and an accessible online store.
Transforming your business online will require an open-mind and technological savviness that younger generations have proven to understand better than their older family members. Talk to your family about how you could transition your business online to ensure survival during tough times.
Working with family members can insinuate some conflicts that can be best avoided through transparency with one another. Having your family as business partners means there will be disagreements in times of decision making. Thus, it is important to clarify the roles that all family employees have and must carry out. When you can’t agree there should be the main decision-maker, but there should always be a culture that promotes critical thinking and constructive criticism.
During tough financial times, family business owners should all take a proportional cut so that all feel the pain.
Has one family employee been getting a healthy paycheck because they asked for one when they first came in and now they are not producing the work needed to continue growing the business? Or, is a non-family employee contributing significantly more than your family employees, yet are being paid less? It should always be reviewed and made fair.
The family business must be run as a business, which means feelings might get hurt when making tough decisions regarding a family member’s salary or behavior, but ultimately, these decisions must be made to ensure the longevity of the business.
Don’t Give Handouts
One of the biggest mistakes a family business owner can make is offering job opportunities to family members that are not qualified for the position that is offered to them. It is always an advantage when family businesses have the human capital to execute business plans due to the willingness of close or distant family members wanting to help grow the business.
However, when recruitment is simply based on whether a candidate is a family member or not, it leads to complexities down the road. Sure, family business owners that are charitable to their family will be seen as saviors initially, but once unqualified family employees fail to meet low expectations, it creates difficult business relationships that can damage personal ones.
Family businesses have a deep understanding of their family employees as they see how members act outside of the workplace. If family members tend to procrastinate chores or communicate ineffectively, you should not expect them to act any differently on the job.
Thus, these business owners must use their insight into the unique characteristics of family members to offer job opportunities only when it will benefit both parties in the long run.
Utilize Outside Perspectives
There will be issues that arise in a business where it can be helpful to bring in outside consultation. Difficult topics such as entitlement, personal issues that affect performance, succession, and salary can insinuate clouded judgment calls made by the business owners. Thus, consulting with business advisors or friends with an outside perspective of the family business can offer valuable points of view that will allow the business to run efficiently.
At times, business owners make decisions that are family-based when it needs to be business-focused, thus crippling the business. No family business wants to tarnish the relationships they have amongst family members. However, in order to sustain the business, consultation outside the family will allow business owners to make unbiased business decisions which if implemented properly, can benefit both the business and family.
Remember The Mission
After a long day at the office, family employees’ minds wander off to different opportunities they could have followed if they did not join the family business. Thoughts of career changes are bound to happen in every family employee’s head at least once, and just “doing it for the family” will not always be a sufficient reason for them to stay.
That is why there must be a shared vision by all family members as to why they come into work every day. Is it to better the local community? To bring a product/service that genuinely helps make the lives of people easier? Or is it to tighten the bond between your family members? Missions that family businesses are founded upon must always answer the question, “Why?” Powerful mission statements not only keep family employees focused on the shared goals, but also instills a motivation to do great by their family terms.
Know Your Family
There is no better person that understands your family than you, a member of the family business. There is no Google article or business advisor that has specific solutions to your family’s unique dynamic and issues. Only through the deep comprehension of your family employees’ histories, personalities, and skills will allow family business owners to make decisions that best correspond to how the family business should be built.
Growing and managing a family business is a difficult challenge as it requires an in-depth understanding of the behaviors of their employees, which in the long run, provides an advantage over competitors. Family businesses are equipped with a business foundation that enforces professional yet close personal relationships, allowing flexibility that most non-family enterprises don’t
Capitalizing on your family’s strengths and covering each family members’ individual weaknesses will ensure your family business flourishes financially and cultivates a very special bond between all family employees.
It isn’t easy running a family business but neither is running any business.
Business Line of Credit and Family Businesses
Financing Solutions works with many family businesses because we provide an unsecured business line of credit that does not require personal guarantees. Because the credit line is unsecured it often helps family businesses because there isn’t any one family member who has to come up with the collateral.
Financing Solutions business line of credit is easy to get in place and is an excellent cash back up plan for emergencies such as when payroll had to be made. The 2-minute online application is fast and there is no credit check done for an offer letter.