Family businesses are a vital element of the economy of any country. According to the U.S. Bureau of the Census, about 90% of American businesses are family-owned or controlled. Thus they are the true driving force which propels the economy in desired direction.
Running a family business is truly a herculean task. Generally entrepreneurship has numerous layers which make it difficult to persuade. But when it comes to run a business along with your family members, a few more layers are added which increases the intricacy of the matter a notch higher. A business which has been passed on from generations or which is intended to last for many generations to come definitely requires additional efforts to amend its invisible dimensions.
Would it be easier if you had access to a proper instruction manual to manage these kinds of businesses? It wouldn’t. Businesses aren’t functioned according to manuals. It takes more than that. However, few tips to understand the dynamics of family business would surely be helpful in the initial stage. So, here are 10 essentials to a successful family business.
- Distinct and consistent channels of communication
While managing and toiling hard to raise a business, many a times you forget the need of communication to your family counterparts with the presumption that they will surely understand you and your contribution. That’s where conflicts may arise. Disputes and differences in opinion are inevitable. With a clear and loud message you can eliminate any probability of ambiguity. Official methods such as frequent meetings can be a tool to track and channelize progress serving as a communication mode for you. Also consideration, communication and connectivity can be your instruments of avoiding family disputes both on and offshore.
- Delegation of roles and responsibility
Certainly, your family members are the go-to people for you almost in every situation. So it may produce a tendency for you to assign most of the important tasks to them which in turn helps to enhance accountability. But you might end up bypassing non-family members from the credit they deserve. This can introduce a situation of turmoil as family members may feel overworked while others may misjudge it as distrust. Meritocracy should be the only thing that prevails!
- Keep it professional, every time!
One of the biggest mistakes people tend to commit is getting carried away with the tag ‘Family’. Sometimes business demands you to be indifferent and detached from family sentiments which may not be consistent with family harmony. But that’s what line of work does to you. Family relations and sentiments should never interfere in organisational hierarchy and structure, instilling everyone’s faith in transparency.
- Realize the might of family proprietorship
Every entrepreneur must be aware of the unique advantages it gains from family owned business. There is no denial of the fact that at times family members can assist you with very low-cost or absolutely no-cost labour. Even further, during situations of survival many from lineage offer their capital so that the business which is the identity of family should not get extinct.
- Seek aid from an outside governing hand
An administration loaded up with enough number of family members can be an over-constrained entity, less room for new ideas and solutions out of predefined ways. Every entrepreneur should assess its organisation every now and then for the situation where lack of creativity and out-of-the-box thinking is hampering its business and credibility. This is the time when you must look for an external governing person who will bring some fresh substance and set the process for you.
Mechanism in the form of board members and advisors from outside the fraternity will surely compensate for missing proficiency and be helpful in avoiding conflict of family interest.
- Separation of regimes
Your business, whether it is founded by you with all your blood and sweat or is inherently received from beloved forefathers, is naturally the dearest thing for you, and so does your family! Both are very significant entities of your life. Therefore it is really important to maintain their individuality by not mixing up things between them. Addressing family issues at workplace and vice versa, will eventually result in piling up stress at both the front. One can understand that maintaining their mutually exclusiveness is beyond bounds of possibility but discussing one at other’s place only during dedicated time can be a way. It should be a perfect blend of capitalism at work and socialism at home. It is important to do transitions planning for a family business beforehand.
- Put business relationships in writing
It’s a common mistake that most of the entrepreneurs commit by being complacent about their family’s reluctance regarding personal interests. Every individual has its own aspirations which drive their choices and preferences, upon not fulfilled, can cause friction which leads to discord. To keep miscommunication and hard feelings at bay, codify methods of compensation, ownership shares, duties and other significant matters.
- Inculcate faith in management charter
No matter how adored your kin are for you but if they are entering into a mechanism which earns you your bread and butter, they must be equipped with some expertise and basic etiquettes. Let them earn their way in through their hard work and knowledge. Also try to instil an inclination among your family members for respecting and appreciating non-family members by setting examples. A well-structured process will eliminate any perceptions of nepotism.
- Don’t be so harsh on them
One of the overlooked aspects of administering family owned business is that leaders intentionally try to set the norms for family members so high to validate unbiased ideology that bitterness becomes inevitable. Undoubtedly, higher performance is something good to have but negative leverage will surely kill their enthusiasm and affinity towards the organisation. Never forget, in this world of shiny and lucrative careers filled with abundant perks, they have put their individuality at stake just to be with you. A little amount of sympathy is never harmful!
- Plan to pass the baton
This is the hardest part by any means for every entrepreneur who has worked fingers to the bone for raising its empire. Nobody wants to sit aside and be a mere spectator. But you need to learn to welcome the inevitable. For an organisation to survive and thrive, new generation has to step in their forefathers’ shoes. This cannot be achieved without making amendments for periodic introduction of new authorities and responsibilities to the new blood. After all, a legacy built by generations must live on forever.
It is evident that running a family business isn’t an easy exercise as compared to conventional organisational set-up. But one must admit the numerous advantages it offers in the form of human capital always standing beside you in your highs and lows. All that matters is how you optimize the challenges it imposes and perks it provides for the welfare and success of the organisation.
– Dhiraj Gore