Each year families across the nation start businesses. With the American Dream in mind, they eagerly pool resources and efforts to launch businesses that will hopefully provide them with wealth, independence and a sense of pride. These enterprises tend to work well because of the loyalty and dedication that is intrinsically woven in familial relationships.
While family businesses have their benefits, there are challenges aplenty. Aside from the normal list of challenges awaiting any new business, family-owned businesses have their own list of difficulties. Let's review a few of the obstacles that family businesses should address on a continuous basis.
Lack of communication
Lack of communication can easily become a problem in the business. Frequently, the person who started the business knows what he/she wants to accomplish and moves in that direction. However, that person also may fail to communicate the plan to the rest of the team.
It is imperative that a family meeting be held on a regular basis to discuss the business. Make sure that the second and third generations working in the business are present as well. Their presence will be beneficial in the event of future succession.
This meeting should be a time when communication is open, honest and encouraged. But if there is something sensitive yet crucial that needs to be shared by younger members of the family, encourage them to communicate with the leader as quickly as possible. Sometimes profound things can come from the mouths of babes.
Who's got next?
Changing of the guard is difficult enough in the private sector. However, in family-owned businesses it can be even tougher. Your child may not be interested in the business. Or maybe your child just does not have the capacity to run the business.
Just because a business is family owned doesn't mean that it has to be family run. Just ask the Wal-Mart family. Sam Walton's wife and their children are the five largest shareholders of the publicly traded company. Most of the Walton children are not even involved in the business.
So it is not the end of the world if your child has an interest in something other than the family business. Quite frequently your child may work elsewhere for a while and garner some outstanding experience that your business may benefit from eventually.
You want the best person to lead at the helm of your business. Don't hesitate to recruit a non-family member that can take your company to the next level.
Employees: family versus non-family
Try not to create an "us v. them" atmosphere in the workplace. While family members make sacrifices to grow the business, many employees also sacrifice to help the business grow. A resentful employee is a dangerous employee. Put forth every effort to make sure that special treatment afforded to family will be given at home and not at the workplace. Remember that your non-family members are part of the team as well.
Keeping the marriage intact
Marriage is difficult enough without adding the pressure of working together. However, some couples have managed to balance work and personal, which is commendable. Although it requires work, it can be done.
It is all too easy to bring home the business problems and/or conversations. Learn to leave the office talk at work. There is nothing sexy or romantic about work problems or issues. Learn to shut it off and focus on your significant other, if only for a few hours before the start of the next day. Boundaries are a good thing when it comes to separating marriage and business.
Lack of owners' agreements
Many family businesses are started without much structure. Everyone involved trusts each other because it is family. But family business does not eliminate the need for structure or order. Whether your business structure is a partnership, corporation or limited liability company, an agreement should be created at the very beginning so that everyone is on the same page. This document should answer these three questions:
• Who is the manager?
• What happens to stock in the event of a divorce?
• What happens if an owner quits?
Go into a family business as you would with any other partners, preparing for the worst and hopefully never having to use the plan.
Join us throughout August as we explore family businesses that have survived all of the above situations and are thriving.