8 Tips for Running a Family Business Well
It’s challenging to keep strong emotions and conflict out of family businesses. These tips will help ensure operations stay on track.
Key takeaways:
- 8 tips when running a family business:
- Consider the domino effect
- Let go of grudges
- Improve communication
- Create clear work boundaries
- Stay objective
- Set clear roles and responsibilities
- Focus on the benefits of working together
- Prioritize succession planning
Running a family business can be very rewarding as you serve customers with years of dedicated experience while building an invaluable family asset. But mixing family and business can cause additional stress on relationships and, sometimes, lead to severe organizational issues. When multiple generations manage operations, tensions can arise, and the company can start to reflect the common dysfunctions of a family.
These eight tips will help you maintain balance and keep the business healthy.
1. Consider the domino effect
Lots of in-fighting in a family business doesn’t just stay with the business leaders. Dysfunction trickles down to employees, kin or not, and eventually to clients. It’s easy for outside parties to get hints of what’s going on behind closed doors. Tension is recognizable and doesn’t look good for the business. Keep this in mind and try to imagine an organization that reflects your business’s values, inside and out.
2. Let go of any grudges
Businesses will suffer if leaders make decisions based on strong emotions instead of what’s objectively best for the organization. When old conflicts guide decisions, people prioritize their agendas and don’t judge situations clearly. It’s not always easy to let go of a grudge, but remember that it can only damage the business—always leave the drama out of it.
3. Improve communication
Whether in business together or not, families of all kinds can experience extreme communication breakdowns that lead to long-term problems. Sometimes openness and a better communication strategy are all it takes to fix these issues. It’s not always as easy to work through family conflicts vs. professional ones, so consider bringing in a consultant who can help you and your family sort out issues. In the end, better, goal-oriented communication is a must for a better business.
4. Create clear work boundaries
It is wise to create detailed policies about what can and cannot be done at work and who does what. For example, make it clear that family issues cannot be discussed during meetings. Of course, some rules may be harder than others to enforce, especially if the family is used to mixing work and home life. But setting precise boundaries helps create a more professional workplace.
5. Stay objective
The only way to see the right decision for the business is to stay completely objective. Consider the facts instead of how someone will react. Don’t think about a family issue when looking at business data or deciding whether a family employee is really the right person for a specific role.
One way to do this is by using the Entrepreneurial Operating System, which focuses on leveraging objective data points and implementing processes that put the right people in the right seats. A systematic approach enables owners to fulfill their vision and core values while exclusively making decisions based on what is most important for the business and the people it serves.
6. Set clear roles and responsibilities
It is especially hard for family members to stay in their lane when running a business together. Everyone may instinctively wear multiple hats, and there might be overlap in what people can and want to do. This is why it’s vital to set specific duties for each person, even if they have similar qualifications. When every role is outlined effectively, there will be less confusion and conflict. The management structure and “chain of command” should always be well-defined and accepted by all.
7. Focus on the benefits of working together
Family-run businesses are not always fraught with conflict and emotions, and they don’t have to be. Recognize and celebrate the unique advantages of this setup. The family gets to work together and continue its history in the community. Younger generations can continue to act on the values that were so important to their predecessors while building an organizational legacy.
Other, more tangible benefits include having access to additional resources like human capital, no-interest business loans, and financial contributions to help the business stay afloat. In addition, there is often a greater sense of commitment from family members, and there can be more leadership stability.
When everyone is on the same page and drama is kept to a minimum, family businesses can be some of the most successful entities out there.
8. Prioritize succession planning
Finally, many family businesses end up failing because they don’t have a succession plan in place. Without the right strategy, roles are left undefined, there is no guidance for a smooth transition, and the future of the business isn’t clear.
The right succession plan should outline:
- Who will take over when the current leader resigns or passes away
- Roles of all other key individuals when the structure changes
- Specific responsibilities each person will have
- Who will lead the transition and if a third party should be involved
- How long the transition should take
- Communication plans for stakeholders
- An evaluation of the business structure and how it will impact taxes
- How critical business functions may change
Focusing on succession planning provides peace of mind now while ensuring that business is set up for a successful future.
If you are part of a family business, aligning everyone around a quality succession plan can be easier said than done. A professional advisor can guide you through key components of implementing effective business systems and designing exit and succession plans.
Provident CPA & Business Advisors is ready to help. Contact us to learn more about our services.