Family-owned businesses comprise a huge part of the US economic landscape. However, only 12 percent of them make it until the third generation. Unlike employees in corporate work environments, employees in family businesses are connected by deep relationships. This poses a new set of challenges for everyone involved.
But this doesn’t mean there’s little chance for a family-owned business to survive. You’ve even seen some of them grow into top industry leaders, such as Walmart, Novartis, and Samsung Electronics.
For family-owned start-ups or small businesses, these tips will help them overcome their difficulties and break the odds.
Work toward a Common Goal
Just like any company, family businesses need to have a clear business goal from the get-go. Having a company vision and mission is one way of reminding family members to work toward a common goal. Whenever issues start to arise, whether because of business matters or individual differences, going back to the company’s purpose helps straighten out problems most of the time.
When deciding on the company’s goals, it’s best to not only think about getting the most sales but also about how to pass on the family legacy.
Communication Is Key
It’s hard to fathom families having difficulties with communication, but it’s a common scenario among family businesses. This is more likely to happen when family members take their household problems to work. Conflicts due to lack of proper communication won’t only affect the family involved. It will also affect the work of other non-family employees.
Although family members meet at the end of the day, it’s best to discuss work only in the workplace. Schedule regular meetings with employees to settle disputes or even just to deliver updates.
Clarify Roles and Responsibilities
Work-related roles and responsibilities can get blurry among family members. Although some of them may be qualified for a certain job, this shouldn’t mean just any one of them can do it. This will only result in conflicts and disrupt workflows.
This also benefits nonfamily employees. When there is a clear division of roles and responsibilities, they will know whom to turn to for certain matters. In the long run, this spikes productivity and harmony within the workplace.
Some businesses treat their employees as a family – and there’s nothing wrong with that. But having too much of this sense of family and not much of business can be the reason a family business fails. This may result in employees slacking off and repeating mistakes, thinking they can get away with it easily.
Even among family members, it pays to consider one another as professionals when work is involved. It’s best to inculcate this culture especially to the younger members of the team.
Listen to Suggestions
Family-owned businesses are often made up of different generations, each with different points of view. Oftentimes, first generations are quick to reject the second generation’s ideas. On the other hand, the younger generation often dismisses old methods thinking they’re outdated and ineffective.
Consider Innovation: Online Selling
To avoid conflicts, it’s best for everyone involved to have a sit-down discussion about one another’s ideas. For example, a senior running an established brick-and-mortar business may consider his son’s idea about selling their products online. This may seem like a bold move, but it’s guaranteed to bring in more foot traffic to the store and more sales online.
Treat All Employees Fairly (Family or Not)
Having family members for employees means founders have to treat them as one inside the workplace. You may think business owners are likely to treat their family better than they would nonfamily employees, but in some cases, it’s the other way around. It’s easy to sneak in last-minute tasks or add more job responsibilities when they’re family.
For a family business to succeed, they need to get rid of favoritism and treat each and every employee fairly.
Prepare for the Future
One of the conflicts that plague family businesses is when parents find it difficult to pass on the business to the next generation. The truth is they shouldn’t expect to manage it forever. To ensure their company lives on for many generations to come, they should make the necessary preparations as early as possible.
It’s best they consult a lawyer to help them put a succession plan to paper. Simultaneously, they’ll want to train their successors early on when it comes to the ins and outs of the business to best prepare them for the future.
There are always challenges to anything worth pursuing, just like running a family business. Do not forget about the benefits it brings, such as having dedicated family members working as one to build something that will outlast them. And sometimes, that alone is enough reason a business survives for generations.