5 Tips for Running a Family Business
Many small businesses across the nation are family controlled and most of these businesses can thrive. Still, it’s important to be aware of potential issues, especially if you’re the main business owner. In this post, we’ll offer tips on how to run a family business successfully, with minimal drama!
How to Run a Successful Family-Owned Business:
1. Seek Outside Counsel
Don’t keep it all in the family! It can be beneficial to have an outside perspective, especially when it comes time to handle financial issues. This could mean hiring an accountant or financial adviser that’ll help you manage your business’s finances or asking a business coach for their advice. In addition, your company might benefit from having a management team, which consists of members who aren’t related to you.
It’s understandable that you and your family won’t always see eye-to-eye on everything relating to your business. Instead of making irrational decisions or having huge fights, make sure that an outside adviser, board of directors, or an employee who isn’t family can provide their input. Your business will be stronger for it!
2. Don’t Borrow Money from Family
Although there are clear benefits that come with running a business with family, there can be complications that come from borrowing money from a family member. Regardless of if this person is a family employee, or isn’t a member of your business, borrowing money from family can lead to uncomfortable situations. This is especially true if your business fails, or you can’t repay them fully or on-time.
As we mentioned in a previous post, it can be safer and less stressful to apply for a loan from an alternative lender. This way, you’ll be put on a set repayment schedule, and won’t have to worry about the awkwardness of being indebted to a family member.
3. Be Honest About Family Members’ Weaknesses
Sometimes we protect the people we love so that we don’t risk hurting their feelings; but you can’t adopt this habit when operating a family owned company. If one of your family members isn’t financially astute, they probably shouldn’t be in charge of bookkeeping, while a family member that loses their temper easily shouldn’t work in customer service. If you’re realistic about each person’s shortcomings, it will be easier to assign roles and responsibilities to each family member that accurately reflects their strengths (and will be best for your business).
4. Talk Openly and Realistically
While it is important to practice strong communication skills, don’t beat around the bush when it comes to dealing with business matters. Even though your co-workers or business partners also double as your family, you need to put your business’s future first. When brainstorming family business ideas, you should listen to everyone’s thoughts, but only execute plans that make sense for your business.
5. Remember, Money Matters
It can be difficult to draw lines when it comes to family, but you can’t risk your business’s finances to avoid family issues.
Don’t allow a family member to make irresponsible decisions with your business’s finances; you’ll all pay for it later. Money can be a big reason for the fall-out of family firms, so ensure that you’re taking all the necessary persuasions. Whether that is hiring a lawyer or ensuring that only certain family members have access to business bank accounts, be sure that you’re making sensible choices.
Running a family business has its challenges, but if you set boundaries, are organized, and are forthcoming with your clan, then you can make your business prosper and avoid conflict. It takes time to learn how to run a family business and all family dynamics are different. If you’re passionate about your business, and serious about working with your family, then make sure to take these family business ideas into consideration!
Editor’s Note: This post was updated for accuracy and comprehensiveness in February 2019.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.