How To Run A Family Business Successfully

Creating a family business is an opportunity to work with those you most trust and care about. It can be very successful as long as it is set up and run correctly—as a professional business.

Working together
Creating a family business can be highly rewarding,and it offers many advantages, such as a shared desire to succeed and the benefit of mutual support. However, there are also disadvantages. Where most roles are performed by family members, the business can lack the breadth of skills and experience found in more diverse companies. Also, family relationships are not the same as working ones, which can result in conflicts that could harm the business .
To help ensure the business succeeds, it is essential to make some early decisions, such as who owns it, how it will be financed, and how profits and liabilities will be shared. You also need to decide the roles of everyone involved, when and how they work, and how they will be rewarded. To do this, draw up a written family charter together (see below”FAMILY CHARTERS”) so that everyone knows what to expect from the business.

FAMILY CHARTERS
Establishing clear roles and responsibilities is particularly important in family-run businesses. Conflict can lead to long-term divisions. To avoid this, create an informal agreement or charter.
All family members involved will need to decide what the charter should cover. Such documents typically outline how the company will be run, its short- and long-term objectives, areas of accountability and authority, and, sometimes, how it might be passed on to the next generation. You may need to consult a lawyer or business mentor to help you agree on tricky issues, such as sharing control and potential wealth.
A business charter is not legally binding. Once you have started selling, it will need to be reviewed regularly to ensure it remains relevant to the business.

❯ Familiarity Knowing each other well can lead to unprofessional attitudes.
❯ Narrow thinking A family workforce may not be open to helpful, external ideas.
❯ Personal resentments These can affect the business and damage family relationships.
❯ Assumptions If there is no charter, senior family members may assume they are in charge.

Is it right for you?
Setting up a family business is not always straightforward. Before you take the plunge, you—and everyone involved—need to weigh the pros and cons to decide objectively whether this is the right choice. A new business requires full commitment and a mutual determination to make things succeed.
Families working together can be a potent force. However, if there are any areas of conflict, these will need to be settled at an early stage to preventthem from jeopardizing future success.

“About 90% of American businesses are family owned or controlled.”
source : https://www.inc.com/encyclopedia/family-owned-businesses.html

CONS
❯ Familiarity Knowing each other well can lead to unprofessional attitudes.
❯ Narrow thinking A family workforce may not be open to helpful, external ideas.
❯ Personal resentments These can affect the business and damage family relationships.
❯ Assumptions If there is no charter, senior family members may assume they are in charge.

Leave a Reply

Your email address will not be published.