Launching a family business can be an exciting venture. Not only do you create the possibility to earn income working for yourself, you also get to do it with the people you love. However, it isn’t always as easy as it seems to run a successful family-owned business.
If you’re thinking about starting a family business, it’s important to weight the possibilities and create a sound plan. Family businesses have some unique characteristics which distinguish them from other business models, making them a unique – but not impossible – challenge for budding entrepreneurs.
The Benefits of Having a Family Business
There are many factors which attract entrepreneurs to the idea of a family business. In many cases, starting a family business can serve to strengthen family ties and leave a long-lasting legacy with the help of future generations. Several worldwide studies also reveal that family businesses tend to be more successful and profitable than most other business types.
The prospect of forming a family business sounds promising at first, but it takes time and patience to flesh out the details. If you have a close relationship with most of your family members, starting a business together can bring the whole family a source of fun, laughter, and shared purpose.
It’s not uncommon for family businesses to eventually expand and become widely renowned establishments and corporations. Even if you have no intentions of expansion in the future, it’s hard to deny the success rates of other famous family-owned businesses, including Walmart, Chick-Fil-A, BMW, and Comcast.
The Risks
Running a family business may sound exciting. However, it’s important to be realistic and understand that this is a complex endeavor with a lot of moving parts. One such factor includes the risk of your business proving unsuccessful.
All businesses face this potential situation; it’s universal to the entrepreneurial experience. However, with a family business, losses your company might face can hit harder, and directly affect the people you love. Being in total control of your family’s business also means you’re 100% responsible for its success. This is a lot of pressure and can become stressful for just about anyone.
Additionally, it’s critical that you properly evaluate your family’s financial situation when considering a family-centered startup. Investing wisely when finances are secure is always better than risking it all on a last-minute attempt to scrape spare change together. Starting a family business is no small undertaking, and requires a strong foundation in order to thrive.
If your family struggles to communicate or handle stress, then running a family business might not be for you. Ideally, your family business should bring you together and create unity, not incite chaos and burnout. Your familial relationships will ultimately become a deciding factor in this business’s success.
Things to Consider
If you’re on the fence about starting a family business, it’s wise to explore your options and take some time to really think about this decision. Here are some things you’ll want to take into consideration before making a commitment.
1. Compatibility of Family Members
In a family business, you’re combining your home life with your work life. This comes more naturally to some people than others. Running a family business means you’ll be spending twice as much time with your family members. For some people, this may sound like a dream come true – but starkly contrasting personalities can make that extra time feel chaotic and exhausting.
Compatibility is a challenge of running a family business. It’s important to know your family and the dynamics they share. For example, an introverted family member might work better alone than in a team. Understanding the family dynamic can help you assign the right roles to the right people and avoid unnecessary conflict or drama.
2. Roles & Responsibilities
Establish clear roles and responsibilities right away. It’s important that every family member thoroughly understands what they are – and are not – personally responsible for within the business. Drawing clear lines between job titles can help avoid problems like confusion and burnout. Ideally, everyone should share a fair portion of the business responsibilities, even if they’re unrelated tasks.
It can be helpful to have one (or sometimes two) established leaders or supervisors. These people will act as the mentors, trainers, and decision makers, ensuring that everything runs smoothly. If your family members are excited to start a business together, try organizing a meeting and asking them outright what responsibilities they’d like to have. You might be surprised at their eagerness to work hard and succeed.
3. Healthy Boundaries
Like any other company, your family business needs a set of rules and guidelines which provide structure to the work environment. Having laid out each family member’s roles and responsibilities, it’s important now to identify when boundaries need to be set.
For example, setting up an attendance policy can be a great start. It’s unreasonable to expect family members to constantly work no matter what – thus, you’ll need to brainstorm together and create rules regarding when employees can take off work, how far in advance they need to give notice, and so on. These boundaries should always be documented to prevent disputes down the road.
Keep in mind that even in a family business, favoritism is unethical and can actually cost you your most devoted workers. To preserve your company’s integrity, you should maintain these same rules and expectations for external hires as well.
4. Consider External Hires
Don’t be afraid to hire people from outside the family. It’s important that you hire the right person for their role, and not just assign any family member to fill a hole in the schedule. Hiring an unqualified or inexperienced individual can be detrimental to your business, impacting your quality control, customer retention, and profits.
It’s fairly common for family-owned businesses to hire externally. Recent studies show that about 60% of the U.S. workforce is employed by family businesses. You can keep your family on the work schedule while also supplementing their efforts with additional hires. This can also help relieve some of the stress from your family by delegating some of the workload to other employees.
5. Take the Time to Train
Running a family business is an idea that often sprouts due to one family member’s particular passion for a specific line of work. In these cases, you’ll need to be prepared to fully train your family members and other employees. This requires your own expertise (or that of a hired trainer) as well as time and patience.
Your family members may be eager to help, but they’re also new hires that need guidance. When your company operates on a uniform set of expectations, you’re going to be able to deliver high quality services every single time, no matter who’s on duty.
6. Strategize as a Team
It’s called a family business because you’re working together as a unit. That means that teamwork and cooperation is absolutely essential to your company’s success. Go over decisions as a team and give everyone the space they need to express new ideas, suggestions, concerns and even complaints. Feedback from your family members is valuable in building a workplace everyone enjoys.
Conclusion
Although it may not be for everyone, many family businesses experience significant success, bringing family members closer along the way. With the right know-how and deep reserves of patience, anything is possible.
Also read:
12 Family Business Ideas Any Family Can Start
10 Challenges of Running a Family Business
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