Should you keep it “all in the family” when it comes to business?
According to the Conway Center for Family Business, “family businesses are economic powerhouses.” In fact, “Family-owned businesses are the backbone of the American economy. Studies have shown about 35 percent of Fortune 500 companies are family-controlled and represent the full spectrum of American companies from small business to major corporations. In addition, family businesses account for 50 percent of U.S. gross domestic product, generate 60 percent of the country’s employment, and account for 78 percent of all new job creation.“
But operating a family business comes with a unique set of challenges from feuds, to nepotism and a lack of succession planning. So, we asked entrepreneurs how to best overcome common family business challenges and here’s what they had to say:
1. Utilize inherent mutual trust
“I own a furniture company with my older brother, and we’ve worked together for 8 years in this capacity. I would [advise other family-owned businesses] to make sure [they] utilize the deep trust and understanding [they] have with family members [that own a stake in the company]. It can take years to develop that type of integral relationship with a business partner, but with family, so many of the crucial elements of a partnership are already there in place from the beginning. Use that to your advantage when it comes to building a company together and all of the important decisions that come along the way.”
2. Allow compromise
“We [own a] designer handbag company that is 3-years-old and my fiancé and I have worked together since the beginning. Our teenage daughter helps very little, although occasionally. The most important [thing] to remember is you will never agree! The infamous ‘choose your battles’ [adage] is more true in family businesses than in any other [type of business]. Thus the most important tip is to allow (and work for) compromise. The secondary part is to remain as calm as possible because [a major] business decision cannot be [easily] changed or altered … later.”
3. Eliminate nepotism
“If a member of the family earns a position, it is because it has been earned, not because of their affiliation. In fact, the only special treatment that they get is that I expect more from them. This can be a hard concept to suppress in a small company; the same issue arises if you become really good friends with the staff. We do our best to cultivate a fair and level playing field for our company and always keep those concerns on our mind.”
4. Set communication boundaries
“My brother and I have a tendency to call at all hours at the night, to text important information rather than email, and invade personal time with work. We now have calendars with clearly marked work schedules and important dates. We [have] also implemented a ‘no text messaging’ rule for important information. And best of all, we now try to shut off the phones when we are not working together. Yet, these are still challenges for us.”
5. Get outside perspective
“We were fortunate enough to find a family business coach who had survived and thrived with his own family business. Having this experience, he was able to provide us with objective feedback as he understands exactly what we are facing. Within 8weeks we [noticed] a huge change in our productivity and profitability as he gave us specific feedback on our individual business performance without any of the family baggage. [Our family business coach] is also training us to give each other feedback and constructive criticism, and of course, how to accept it as a business team member, not as a brother or sister who ends up getting [their] feelings hurt. I cannot encourage this enough for family businesses.”
6. Turn off work-mode outside of the office
“I work with my wife and it’s certainly tough to spend long hours during the day as coworkers and switch over to spending time together as a family at home. It’s important that you both spend some free time doing what you enjoy, maybe a round of golf on the weekend or my wife might take the afternoon to get a massage or have lunch with friends. The other challenge is turning off work-mode once you arrive home. It’s tempting to discuss ideas that pop in your head while sitting around the dinner table, but it’s important to remember to separate the office from home and spend quality time with your family.”
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