Family #businesses are the linchpin of the American economy: the 5.5 million family-owned businesses in the United States contribute 57% of the GDP and employ 63% of the workforce. Like all businesses, family-owned companies face unique challenges. For every Walmart and Ford that lasts, many more fail—only 30% make it to the second generation, and by the fourth, only three percent are still in business. Family businesses that endure tend to follow these strategies.
Establish a family employment policy
Decide how family members will be considered for positions in the #business, and put your policy in writing. It’s a great idea to start them young—offer internships, let teenagers help out during busy seasons—so you can see if these family members have potential. These opportunities are good for the family members as well who may find that they are passionate about the work or may decide to follow a different path.
If you have job descriptions for each position at your company, it will be easier to explain to Aunt Edna why her irresponsible youngest son isn’t a good candidate for the operations manager role. Determine if you want family members to go through essentially the same process as outside hires or if you are willing to offer untested siblings or cousins trainee positions.
One of the dangers of families working together is that if relatives quit or get fired, they might find that they have lost their family as well as their jobs. Work with an outside mediator or consultant in cases of disciplinary action or termination to remove the personal issues as much as possible.
Encourage regular communication
As much as you’d like to leave family issues at the office door, emotional boundaries are difficult to maintain. Whatever your meeting policy is, just be sure it is regular: 15-minute check-ins each morning, quarterly family meetings, weekly team sessions. If these meetings are not on your calendar, they probably won’t happen. In our work with family-owned businesses, we see communication breakdown as one of the most common causes of business troubles.
Embrace change
The first generation must be willing to listen to the second generation, and the second generation should not do things the same way just because that’s how Mom and Dad used to do them. Change is inevitable, and each generation of your family business should look carefully at which approaches are still working and which can be set aside. Younger family members can introduce new technologies and social expectations to keep your business thriving. At the same time, older, more experienced family members are the keepers of a wealth of knowledge and experience, and their wisdom should be given weight.
Plan for the future
Every company needs a succession plan, and that includes family companies. The time to start planning for the handoff from one generation to the next is long before it happens. Too often, the entrepreneur who started the business has a hard time walking away, causing rifts with other family members and even harm to the company. To ensure a smooth transition and to minimize any financial impacts, enlist an accountant or lawyer who is skilled in business succession planning. This will minimize the complicated feelings that can arise in discussions of money, aging, and finances.
Enlist outside help
It's unlikely that you will be able to staff every position in your company with relatives--and it's actually a good thing to employ non-family members with skills and perspectives different from your own. Just be sure to treat them fairly and avoid showing favoritism to family member employees.
If you have a successful business, chances are good that you are providing a valuable product or service. But there is so much more to running a business, and many family-owned businesses struggle with areas such as Finance or #HR. Since these functions have legal and financial ramifications, ignoring them is not an option. Fortunately, you don't necessarily have to hire managers to handle them. You can partner with outside firms who can ensure you are reducing any potential exposures.
Wondering if you are doing all you should for your company's #finance and
#HumanResources needs? For help with Finance, email Dave Verno at dave@lmc.group, and for HR expertise, email Christina Davis at christina@lmc.group.