Family Businesses

Family Business Advice

Looking for good advice for family businesses? Working with family members in a family-owned business is full of challenges, so we've assembled a list of excellent family business tips for you.

It's hard enough to deal with family. It's even harder to deal with family in the context of a family business.

Family businesses face all the same challenges that other businesses face, but they also face issues that are unique to family businesses. Which family member has the most power? Which family member makes the most money? Do family members get more perks than non-family members? Who will get the business when it's time to pass it on to the next generation?

Given all these issues, it's no wonder that running a family business is a challenge. Here are some great tips for avoiding conflict in a family business and keeping things on the right track.

Communicate Early and Often

The best tool for keeping a family business focused on business is good communication.

Good communication avoids unpleasant surprises and can minimize the damage on potential family business crises by addressing problems sooner rather than later.

Take the time to ensure that good communication channels between family members are in place. It's a smart idea to conduct family-only business meetings at least twice a month. A family business meeting allows family members get together to discuss how the business is doing. Each family member can discuss their areas of responsibility.

Don't Make Working at the Family Business Mandatory

It's wise not to force a family member to join the family business. Let them know that it's an option but encourage them to consider other options.

If a family member gets experience somewhere else and then joins the family business later, that's a good thing. They will bring new ideas and fresh thinking - avoiding the insular thinking that often plagues family businesses and ultimately leads to their downfall.

Nip Family Business Problems In the Bud

When issues arise between family members, address them quickly.

If a dispute is not resolve early, it can turn into a much bigger problem. Be on the lookout for hostility or jealousy between family members, and deal with such issues directly as they arise.

Don't Take Your Work Home and Visa Versa

It's smart to distinguish between family discussions and business discussions and keep those conversations separate.

Don't have business meetings at the house, and don't have family meetings at the business.

Mixing the two together all the time is a recipe for disaster. The business, the family or both may fail as a result.

Hold Family Members Accountable for Results

In a family, the standard is often to forgive a family member when they make a mistake. In contrast, mistakes in business are not easily forgiven.

Accordingly, a family business must lay down clear guidelines: in the business, we are going to hold you accountable for your actions, just as we hold all of our employees accountable for their actions.

Every family member should have a detailed job description that outlines what they are expected to contribute to the business. Measure performance against pre-defined metrics so there is no ambiguity on whether desired results were achieved.

Treat Family Members and Non-Family Members Equally

If family members get preferential treatment, non-family members will lose their motivation to help grow the business.

Smart family businesses don't flaunt their ownership by giving family members perks that others don't get.

Do whatever it takes to make non-family members feel that they have the same opportunities as family members. Otherwise, expect your family-owned business to deliver mediocre results and lose market share to competitors.

If you can't treat non-family members equally in some area - for example, maybe they can't have stock ownership like family members do - make up for it in some other way.

Ask A Family Business Expert for Help

When in doubt, ask for help.

Family business consultants are well trained in dealing with issues that are unique to family businesses. They will provide you with advice on dealing with complex family business challenges. To find family business counselors in your area, your best bet is to search in your favorite search engine with phrases like "family business advisors" or "family business counselors." You should also ask other family business owners for referrals - they may have already addressed many of the challenges you are currently facing.

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We greatly appreciate any advice you can provide on this topic. Please contribute your insights on this topic so others can benefit.

  • Bill posted on 6/24/2009
    In the family business I have learned that it is not a good idea to correct Dad at work especially in front of other employees. The boss' son never wins the dispute.
  • JHindt posted on 8/3/2009
    Your story about your family business is a good example how hard family business can be when there are problems, but also how nice it is to have family so close. I have been working in a family business for nine years and have faced some of the same problems. When I started I had several plans for the company, which I believed could save the family business, but after I had been working there almost three years I realized how hard it was to grow and get good ideas trough. However, I started to read books and family business sites, and ended up as a member of FBA. We got an advisor and access to several events that made us think innovative and the business is now a growing business with fifty employees.
  • A.M. posted on 3/31/2010
    This is very good advice and would recommend anyone interested in getting involved in a family business (especially) to educate themselves of the "pros" and "cons". I am currently in the middle of a family business dispute that will likely end up in court. It has caused a serious breakup in what was once a close family relationship that I doubt can ever be repaired. We experienced many of the pitfalls noted above which has caused what was once a very successful business an unfortunate situation; lack of communication, treating non-family members unequally, lack of accountability, forcing family members to stay in the business (or forego their equity) and refusal of allowing a family business expert to assist. I wish those considering family businesses the best of luck and recommend they put together a solid plan to assist in its success.
  • VDD61 posted on 8/15/2010
    Ever since my parents retired, I have been running a family business which is a third generation store. They retired 14 years ago. Part of their retirement income is the rent we pay on the building my father still owns. Several times I've raised the subject of buying the building or at least switching to a "rent to own" model. My father wouldn't discuss it. Recently I brought it up again. As they are aging I would like to clear this up before they are unable to work out a deal. After 14 years of rent I'm now told I can buy the building for assessed value. My father reminds me that his own father sold it to him at retail. I hesitate to remind him that assessed value in this day and time is much closer to retail value than it was back when his father sold the building to him. All my life I've heard about how my grandfather prorated the subscriptions to magazines that were still coming to the business when he retired and sold the store to my parents. I don't want to seem unappreciative, and have always striven to be respectful but the fact that the past 14 years rent doesn't apply in any way to the purchase of the building is like a burr in my saddle. I don't think I would feel this way if I hadn't been told for my whole life how his father didn't treat him right. My father didn't rent the building from his father for years as we have. There have been times when we have been late on rent but I've always paid it off and caught up. I think that issue is being held over my head about why I am not being allowed to buy the building. I'm also told that he'd always assumed I'd take the building as part of my 1/3 (3 kids) when he and my mother were deceased. My siblings aren't involved in the business. Is it too much to expect that this issue should be seperate from the estate? After about $100,000.00 in rent I can't be thrilled to now begin to buy the building starting from scratch. Advice please.
  • Ken Gaebler posted on 8/17/2010
    Ken Gaebler
    VDD61, that is a tough situation. Your story makes a strong case for thorough family business succession planning that addresses these kinds of things years in advance so there are no unpleasant surprises. I'm a big advocate of hiring an exit planning consultant to plan out these business transitions. For you, it may be too late for that. While you make a good case for a lower price, your father has no real obligation to lower it. You'd do well to think through some compelling arguments for his selling it as a discount. I'd recommend you read a few good books on negotiating and prepare thoroughly for the next conversation. Good luck.

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