Family businesses are dominating the industry. Two-thirds of companies around the world are accounted to family businesses. That’s why family businesses have the most significant impact on both economic growth and job openings.
There are big companies worldwide that are family-owned, such as Wal-Mart, Tyson, BMW, and Ford. Even though family businesses are the major driver of the economy, only a small portion is passed on to the next generation. 30% into the second generation, 12% into the third, and just 3% make it to the fourth.
That’s why it is vital to know how to keep your family business’s success up until the next generations. So, what’s the secret? We’ve taken a moment to process this thought and came up with these tips on making your family business successful from a startup.
Plan and set boundaries
Family members that are involved in the business can easily talk about work most of the time. But always remember to separate business, home, and personal life, as it can cause many problems and stress.
It is best to limit talking about business when you are not in the office or not working hours. Of course, it is not always possible. But do your best to avoid talking about business when it is not appropriate. For example, when you are in a family bonding, wedding, party, or funeral.
Enjoy your personal life during your free time. Set aside thoughts about work and save your plans for later.
Have a regular and transparent method of communication
In weekly meetings, you will assess the progress of your business, talk about the problems and possible solutions. And consider your family member’s opinions too to avoid conflict. If you think their opinion isn’t going to work, explain it to them nicely.
For instance, if you’re planning to consult the Chinowth & Cohen Realtor for a new home that you’ll use as a family office, you might want to ask for their inputs. Or you can ask them to join your meeting with the agents.
Divide and assign roles and responsibilities
Maybe your family members have skills that can qualify for a task or responsibility that is important for your business. And to avoid conflict, it is best to assign duties to your family members for them not to think that you don’t trust their skills.
You can decide on big decisions together. But having a debate over each plan will pull your business down.
A family business is a business
One of the common reasons for the fall of family businesses is that they emphasize the “family” side and not the “business side.”
Family harmony is not always compatible with a healthy business. If your family member isn’t doing any good for the company, try to explain it to them or cut them off. It might sound harsh, but it is the best way to prevent them from pulling your business down if they are not serious.
Know the advantages of family ownership
There are a lot of unique benefits offered by a family-owned business. For example, human capital is easily acquired with the help of other family members. And it is an excellent strategy for your business’s survival.
Because your family members can provide low-cost labor or no-cost at all, other firms that a trusted family member owns can also offer help or assistance.
Fair treatment for your family members
Many business experts are against hiring family members due to possible internal conflicts, but they are sacrificing the great benefits of a family-owned business.
There are a lot of small companies that are not capable of surviving without the dedication and hard work of family members. Family members, especially the skilled ones, can be a great asset to your business.
But remember to avoid favoritism. Promotions, pay scales, praise, and criticism, and work-schedule should be given equally to family and non-family employees. Do not set standards based on being a family member or not.
Create a succession plan
It is crucial to create a succession plan to ensure the continuous growth of your business. The goal should contain when and how the current generation will pass the company to the next one.
It is also ideal to have them inside the business to have experience and knowledge about how the company is running. So that when their time comes to handle the business, they will know what to do, and they will be confident about it.
Always remember that there will always be a downfall on the journey. Owning a business isn’t just about the ups. So make sure that you are physically and mentally ready.
In a business, you can’t avoid having different plans and opinions, especially when you have a lot of family members involved. Avoid having disputes and schedule weekly meetings.