Being an entrepreneur comes with its fair share of challenges. Add family to the management mix, and those hurdles can be multiplied or divided, depending on the relationships involved. We have heard horror stories around families involved in business together, but, family can bring up success and some unique obstacles too.
Growth and success are not easy to come by in any business and these are only achieved through hard work and by overcoming challenges and setbacks. With its unique challenges family businesses can overcome them through the following measures.
Communicate with family: You might think you know each other so well that the other person will always know what you’re thinking. Before going into a venture together, it’s critical that expectations are clear and voiced freely. Spell everything out and be very specific about what each person’s role will be, what each of you will get out of it, and how you’ll make decisions moving forward. You don’t want there to be any room for misunderstandings.
Families willing to establish strong lines of communication and set firm guidelines can find that delicate balance of family unity and business success. In the end, it is possible to achieve that equilibrium. Enjoy the rewards together as a family and feel the sense of accomplishment as a team.
Battle resentment: Families looking to go into business together should never do anything that would create resentment or impact your personal relationship. Family owned businesses may benefit from the ownership of a tightly knit family, it suffers in times of feuds too. To avoid the family feuds from interfering and affecting the health of the company, it is important that they be resolved in time.
The rest of the family needs to sit the feuding parties across the table from each other and help them sort the whole thing out. Unfortunately, this is the only thing that can help in this regard.
Fun: Many entrepreneurs often fall into a trap, working so hard they forget to have fun. It’s easy to make everything about the kids or work and forget about you as a couple. Make time to not talk about work. Remember to laugh and not take it all so seriously. The journey is long; you have to enjoy it along the way.
Fitting jobs to family members' skills: A family employment policy should be in place, with a priority of ensuring that each family member hired is an ideal fit for the position being filled. Too often business owners want to pull family members into their business, some for ego, some just because the person needs a job, some because they want to surround themselves with family.
But creating positions for family members or giving them jobs that don't fit their skills often backfires. Once they're hired, it can be difficult to fire unqualified relatives, and they may end up costing the company money.
Leaders in family businesses should set strict criteria for each opening in their company and make sure that only candidates with legitimate qualifications are considered. Fair compensation can be a tricky topic, especially for a family business where some people may feel they are contributing more than others, but where everyone may have an equal stake in the company.
The best way to avoid resentment or feelings of entitlement is to ensure that each person's salary is based on what they would be paid in a similar position in the open market. Once compensation has been determined, any additional profits can be split evenly or provided through fringe benefits. Planning for the future family businesses have roughly a one in three chance of continuing to the next generation.
Only 30 percent of family businesses transition to the second generation, 12 percent to the third generation, and only three percent to the fourth generation. Succession planning is critical for the survival of a family-owned business in the face of such stark numbers.
However, many family businesses put off planning for succession because they don't want the transfer of power to cause a rift within the family. When the lines of responsibility and authority are not documented, the business becomes unstable, family businesses should have a well-defined plan in place that establishes the lines of responsibility and authority.
Establish a dispute-resolution process and enlist the help of a business adviser or advisory board consisting of non-family members to address any grievances.
Nepotism: It is human to favour those that are related to you by blood or marriage, you consider them your own. In the professional world though it becomes a little bit of a baggage though and gives birth to nepotism. Nepotism in any business can become cancerous, eating away into the existence and health of any organisation.
Finally the most important tip is to schedule white space in your calendar. It is imperative to have time to yourselves and to protect your schedule to have necessary downtime to reset and recover.