10 Simple Rules for Family-Owned Businesses
Small business owners are the backbone of the U.S. economy. There around 5.5 million family-owned and operated businesses in the U.S. About 90% could be deemed family-owned. They could be just two-person partnerships to large companies.
The secret to a successful family business is it must be treated like any business and not an extension of their family. Successful family-owned businesses can follow some basic rules.
- Do not create a job for a family member. Either you have an opening for which they qualify, or you do not. There is no creating a job for a family member. Interview them the same as you would anyone else. They need to show they are capable of working at the business.
- Have the family member work somewhere else first. They must prove themselves, to you and the other employees. It also helps the business if they come in with some outside experience, fresh ideas, and training.
- Treat family members the same as any other employee. Family members may or may not try harder than the other employees. They need motivation from the owner or their manager, just like any other employee.
- If possible, have family members report to non-family employees. Remember, family members who are not the owners now are employees and should not report to other family members.
- Build a firewall between family and business issues. Make sure family relationships stay out of the business. You don’t want to put other employees in between your family squabbles. This goes for family gatherings, no business talk. You don’t want to put non-associated family members in between your business family squabbles.
- Be clear about the business succession plan. The family members need to understand what is expected. If a family member is not associated with the business nor active in it, should not be looked at as a successor. They will not understand the business.
- Have one clear successor. It’s never a good idea to have 2 or more successors. Someone has to be in charge.
- Create a board of directors that includes non-family members. You will run into tough situations within the business and need an outside perspective who can bring a non-emotion viewpoint into play. This way family members can avoid being swayed by other family members.
- Sell the business and don’t gift it. Besides tax implications, it’s still a business that should be sold in one form or another. If you gift the business to a family member, they will not have the same respect for it, the employees, and customers as if they had to purchase the business.
- Make sure all participating family members agree to these guidelines. This is where the saying, “it’s just business and not personal,” comes into play. Have a firm guideline in place for family members and they cannot cross it.
Contact Biz Coach Steve today to see how he can assist you to get the results you want in your business, steve@bizcoachsteve.com, or www.bizcoachsteve.com. He is in the business of growing businesses. Need a speaker, contact Steve today.
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