Starting a business with your family, be it your siblings, spouse, children or other family members will present a unique set of challenges for you. And these would be over and above the general problems that you are bound to have when kick-starting a business. For this reason alone, it is said that only one in every three family businesses survives to pass on to the next generation.
The start up stage is going to be rife with dangers that will be of an acute nature. In all the excitement of the prospect of working together with their families, people often jump in without having a clear idea of the roles and responsibilities they will have to shoulder to help keep the business afloat. When working with family, you should ensure that you’re being clear and upfront about the payments, costs, exit plans and other details before this comes in between your relationship with the person and become a huge problem.
So, after giving this a great deal of thought, we bring to you a set of essentials to help strike the perfect balance when starting a family business.
- Create clear and customary lines of communication
It’s important that as family, you don’t blur the lines between professional and personal. Instances of differences in opinions and resulting problems is to be expected. To iron out these wrinkles, consider scheduling weekly meetings to gauge the scale of progress, resolve differences and settle disputes.
- Divide roles and responsibilities
While different family members may be well equipped for certain tasks, it is best to still divide the roles and responsibilities so as to leave no room for any conflicts. Important decisions can be made together but debating on every minor point won’t be good for business.
- It’s business so treat it like one
A rather common downside of having a family business is placing too much emphasis on it being about “family” and not a “business” per se which is what it actually is. There are various attributes that come into play when people strive to carry on a healthy business but mind you, family harmony is certainly not on the list so be ready to address such situations when they arrive.
- Business relationships should be written and not verbal
It’s rather easy for family members to get pulled into a business start up with no plan whatsoever and this might extend to not being specific regarding the kind of business relationship they have with each other. To avoid miscommunication or hurting of feelings, it is best to put everything in writing with reference to the compensation one is to receive, the shares that one owns and other related matters.
- Create clear management lines
This is important because then the employees would be clear as to whom they are supposed to report. It might happen that family members who either hold or will presumably hold a future ownership stake in the business might take to reproaching employees who may not report to them. This will make the employees resentful towards the firm and needless to say it’s unhealthy for business.
- Seek external advice
Decision-making process might be a tad bit slow and pretty exhausting considering the web of family ties. Innovative and fresh ideas can either be thwarted or might get lost in the family tangle. A way out of this is to seek advice from external parties who have no affiliation with any family members as there will be no room for partiality. It will be a rather good way to give the business a reality check.
- Build a good succession plan
It is best that family businesses have a formal succession plan in place so as to avoid any troubles at a later stage. This plan should highlight the details regarding when it will be the best time to pass on the legacy to the younger generation. This plan has to be financially sound from a business point of view and family members can use a Will writing kit to do the deed. Seeking external professional advice on this matter is recommended.
If your start up venture is one with the involvement of family members, you’ll have to take additional steps to evade burnout and to make sure that there’s ample of on-the-job harmony.
These essentials will tip the scales in your favour and will help you lead a business that is successful!