By Victoria Treyger, Kabbage
Family businesses make up a major portion of small businesses in the United States; however, only one-third of family businesses survive after they have been passed to the next generation. If you are currently working for your family business and have been a part of it your whole life, chances are one day you will be taking on the family business. When the time comes for your parents to pass the family business down to you, what do you do?
Running a successful business is one thing. Running a successful family business is another feat that is much harder to accomplish. The secret to working for and running a family business is to take the family part out of the equation and run your business as if it is any other business. Having your family involved is obviously a must. That’s how you got to where you are today, but remember just because they are family doesn’t mean they aren’t also employees.
Here are six tips for taking on your family business and helping it succeed:
1. Have A Succession Plan.
Your business operates based upon a business plan that was drawn up at the conception of your family’s idea. That business plan has probably grown and evolved throughout the years, so when it gets time for your parents to retire, make sure they add a succession plan to the end of it. This plan will lie out what they want the family business to look like in the future. This will be a basic roadmap that organizes how the business will work in your hands. The succession plan should state you as the official leader for the family business as well as detail how the transfer of ownership will be formalized. Having a plan in place will hugely benefit the business because it saves you valuable time when the change actually takes place.
2. Review Your Products and Services and Analyze Your Demographic.
Just because you’re running your family business doesn’t mean change isn’t in the playing cards. This is your chance to offer products and services that are relevant in today’s market. Do market research to see how your competition is stacking up. This is your chance to make vast improvements to the business that your parents might not have been prepared to do. Change is good; it gives you a chance to reintroduce your business to the local community!
3. Communicate Effectively.
One of the major keys to success, especially when taking over an existing business, is open and honest communication. Communication is the key to healthy relationships, which you want to have with your family and your employees. When your family is your employees, communication pathways tend to get clogged up.
Be sure to put the effort into these relationships by having one-on-one meetings with your employees weekly or monthly. That way everyone has a chance to voice his or her opinion and actually feel heard. Another important aspect of communication within a family owned business is making sure your non-family employees feel heard, understood, and in the loop. You do not want to make your employees feel as if only the family members are ‘in the know’ about the business. Create a business family where everyone feels as if they can voice their opinions, be heard, and have an equal chance to listen and be a part of your organization.
4. Consider Hiring A Non-Family Member as Operations Manager.
Having employees who aren’t related to you can help even out the playing field at your family business. “Outsourcing” your management makes handling employee issues a lot easier on you because non-family members have an objective point of view. Having a non-family member as an authority figure also frees up a lot of time for you to deal with growing your business instead day to day operations.
5. Don’t Favor Family Members.
It is extremely important to remember that although you are running a family business, you have employees that are not family members, as well. Do not create two groups of employees (family vs. non-family). Showing favoritism like this sets a bad example not only for your family members who could be taking over for you one day but also to your employees. If you want to have the respect of all your employees, refrain from showing favoritism. You should also understand that showing favoritism could potentially demotivate your employees who aren’t related to you.
6. Create Boundaries.
There must always be a boundary between business and family, even if you are running a family business. Create a system that works for everyone such as no talking about work after 5 p.m. In general, it is smart to not work on work with your family when you are outside the office or on vacation because it can make things professionally and personally messy. Always make sure to work on your relationships outside of the office just as hard as you work on business inside of work. Don’t infringe on your own or anyone else’s personal time and remember to try to get away from the business as often as possible to conserve your personal relationships.
Just because family businesses are harder to run on average than most small businesses, it is important to remember that it is not impossible and not without its own privileges as long as you are careful, pay attention, and communicate effectively. Be sure to remember to run your business in a completely fair and transparent fashion as to keep the rest of your employees happy.
When taking over your family business, remember to create a succession plan so that your employees are aware of the changes to come. You should also be sure to have an employment policy with eligibility rules as well as boundaries set up for family member employees.
Another good idea to make the transition smoother would be to write up the core values, mission, and goals of the business moving forward to be sure everyone is on the same page. And lastly, remember the best tip for taking over and successfully running a family business is to keep family emotions and dynamics to a minimum. Run your business as if it is any other business out there!
Victoria Treyger has more than 15 years of experience in building brands and customer loyalty. She joined Kabbage because she loved its mission to understand customers better and provide them with cash when they need it. Kabbage has provided $150 million+ in funding to small businesses since 2008.