Family run business can be a very rewarding experience, but as anyone knows, families have a tendency to come with issues that can harm the success of a business.
Before you launch your family business there are four main threats to be aware of. Below we discuss them and tips for managing them.
1. Family feuding
Remember that time your sister stole your favourite top, or that annoying name your brother calls you, or your dad constantly telling you to clean your room?
Family dynamics are complex things that need to be taken into account because if they’re not, personal life will creep into business life and affect decision making. Sometimes conflict is caused by different interests, personal egos or rivalries.
Make sure you communicate openly about everyone’s roles in the business, that there is a common goal, and that there is a distinct line between business time and personal time.
There is a delicate balance to strike when running a family business, especially if there are non-family members employed too. Be very aware of hiring, promoting and giving financial rewards based on family relationships rather than merit and ability.
You’re going to upset people, non-family employees will lose motivation and employee retention will become a problem. On the flip side, family members can become complacent, resulting in non-performance. Both of these will cause your bottom line to suffer.
3. Emotions running the business
In family run businesses it’s difficult to say, “it’s not personal, it’s business,” especially if you are directly managing family members. It’s never a pleasant experience receiving critical feedback, but it can feel even more sensitive when coming from someone they love.
Be aware that emotions interfere with business and they can influence your ability to make sound business decisions. Strike a balance between being sensitive enough to not cause problems at home, but be detached enough to keep the business’s wellbeing in mind.
4. Succession planning
Just as important as defining roles for family members in the business is planning for the future.
A successful business needs to be able to function without you or certain family members, for example when someone retires, passes away, or decides it’s not their scene anymore.
Passing a business down generations is a tricky process and its essential to ensure that the people it’s being handed to both want the opportunity and have the skills to continue running the business.
Imagine the pressure on Richard Branson’s son when his elder daughter decided she wanted to study medicine instead of run an empire. Be sure to plan for the future long before you ever need to address the issue as trauma and grief can result in poor business decisions.