5 Tips to Running a Successful Family Business

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Is working with family members a dream come true - or a complete nightmare?  This all depends on how the business is run and how well the relationships are maintained within it. 

There are plenty of stories to defend both sides of this argument; some leading to legal action and deterioration of family ties while others achieve great success working with family and pass on the business through multiple generations.

The term “family business” contains a widespread group of different businesses, from multi-national chains to local corner store shops and a wide range in between. The key to a successfully run family business lies in a few core responsibilities that are universal, regardless the size of the company and the family members that comprise it.

In most ways, working effectively with members of your family isn’t much different from working with any other business partners. Being brothers, cousins, sisters, father-son/mother-daughter, etc. isn’t enough to make a business partnership work. It takes an approach that encompasses some principles, which can be found below, courtesy of CNBC.com.

1. Communication is everything. Communication is the key to good relationships of any kind. With family though, it can take a little more effort, as there are often dynamics at play that make communication more complicated. We can have a tendency to feel like a loved one knows us so well that we shouldn’t have to voice our feelings or expectations. But if you want your partnership to work, it’s important to let go of these assumptions and communicate clearly and openly, just as you would with a non-family business partner.

2. Expectations need to gel. To a large extent, this point goes back to communication. Specifically, it is vital that each partner’s expectations regarding their role and those of the other partners are communicated clearly. Again, assumptions are a killer. Lay out what each of your roles will be in the business before starting. Voice what you expect from your partner(s), and put it in writing to solidify it.

3. A formalized business relationship is best. However strong your relationship is now, you’re bound to have disagreements with any business partner. Drawing up a written agreement for your partnership (and including the expectations from #2 above) is a must. Some entrepreneurs are reluctant to take this step, as it may seem as though a written agreement demonstrates a lack of trust. On the contrary, a written agreement for a business partnership is simply good business and is designed to protect all involved parties. The bottom line is that you’re much more likely to be sorry you didn’t create an agreement than that you did.

4. Priorities are important. We all want to be successful entrepreneurs and make a lot of money, or change the world. But it’s important to prioritize your family relationships over business. It’s heartbreaking to hear of families that have been ripped apart by financial or business disputes. At the end of the day, you can build another business or make more money, but you’ve only got one family for life. Remembering that can help put disagreements into perspective and avoid the nasty fallout of a family business gone badly.

5. All-business is no fun. Although you might have a lot of fun working your business with family members, it’s important to set aside “family-only” time too. If all you ever talk about is the business, not only will your relationship eventually suffer, but you’ll drive the other members of your family crazy! Take time out from business to do the things you would do together if you weren’t business partners. Try going out to lunch or for a round of golf without talking about business at all. If you do what it takes to maintain a strong family bond, it will only serve to support your working relationship.

Is working within your family business a dream come true, or complete nightmare? Let us know on the Continuity Family Business Consulting Facebook Wall, linked HERE. 

For more information on Continuity FamilyBusiness Consulting, visit our website: ContinuityFBC.com.