The family that does business together, stays together. At least, that is what the theory says. In real life, starting a business together with your family members can lead to ruptures, long-term recriminations and rifts which take generations to mend. However, when a family business runs smoothly, everyone feels rewarded and fulfilled – both on a professional and a personal level.
If we are to think of some of the largest companies that have grown to global level, they all started as family-run businesses. Thus, from the inception of the modern business system, the family was the basic unit which generates productive ideas and keeps an enterprise running and successful. On many levels, it is understandable: family members trust each other and work together for a common goal (the prosperity of the family as a whole).
However, we should not forget that families are composed of individuals, each with their unique traits of personality, with their specific set of skills, goals, dreams and expectations. On more than one occasion, these will clash one against the others, resulting in personal feuds and loss of trust and harmony.
In order to make a family business run smoothly, you should keep in mind these important considerations:
1. Do Not Just Shake Hands on Any Decision
Starting with the incorporation of the company, its associates, their shares and participation in the company patrimony and down to each job role, everything must be put in writing. It does not mean that you do not trust your own family, it means that you are all acting with the due diligence of any professional business person. Written documents always help clear up confusions, misunderstandings and help you salvage your share of investment in case you (or any other family member) wants to exit the business.
2. Separate Business from Family
When you are in the office, discuss business matters and act as professionals. When you are at the dinner table, discuss family matters and leave business discussions out. It is very important to make the clear separation between your work and personal life if you want to keep your sanity and your family united. In this manner, every member will understand that what happens in the business does not (and should not) impact on how you feel for each other as a family.
3. Do Not Offer “Pity” Jobs
Cousin Joe, who has never been able to keep a job for more than a few months comes at your doorstep begging for a chance. Or worse, Aunt Marge comes on behalf of Cousin Joe, asking you to give him just a little, simple job to do to help him pay bills. This is a perfect recipe for disaster, both for the business and for the family. Jobs are not pity offerings, but earned. If Cousin Joe has the right skills to be a valuable and dependable employee, then by all means give him the job. But do not burden your business with an unreliable person, just because you feel bad about them being out of work.
4. Determine Performance Expectations and Accountability
If you are your uncle’s manager, but you never clearly specified who is accountable to whom and who evaluates performance, you will certainly hear the old line “I’ve been doing this since you were in your nappies”. Age or family degree do not matter in business – there is no exception to that.
Once you have determined the hierarchy in your family business, make sure that everyone knows their position, the expected performance level they should reach and who is entitled to evaluate their performance.
5. Prepare an Exit Strategy
It does not mean that you are putting the kibosh on your family business – it simply means that you are acting responsibly towards everyone involved in the business. Make sure that everyone knows how they can take back their investment, and what happens in case the business collapses, merges or is sold to an investor. Having a clear exit strategy in place will help you keep your family united, if not your business.
Remember that there will always be tense moments, disagreements and contradictory talks. Get over them professionally, without hurting either your personal relationship with your family members or the opportunity to keep the business growing and successful.