8/16/2016 - By Zachary Farrington
Running a family business has its pros and cons. For many owners, the biggest upside is the opportunity to work with loved ones and build a meaningful enterprise that will last for generations. An oft-cited downside is the difficulty of balancing family and work priorities, and having to be both boss and parent.
How do the best family businesses survive and thrive? Here are few lessons from successful family companies:
Do keep communication open. Outsiders often assume that family businesses don’t have communication problems. After all, relatives have established communication patterns and more opportunities to talk to each other than unrelated coworkers do, right?
In fact, family relationships often get in the way of good communication. Relatives may talk frequently, but they may not find the time to get into deep, strategic business discussions. Sometimes family members avoid discussing substantial or difficult issues because of conflicts or assumptions that have nothing to do with the business.
To ensure open communication about important topics, schedule regular family meetings with specific agendas. Discuss company personnel issues, operations, market share, product and service expansions — every-thing but the typical “family stuff.” If staying focused is a problem, consider hiring an outside facilitator to keep the discussion productive and moving along.
Do invest in leadership training. While family members may share certain personality traits, it’s unfair to assume that leadership skills come naturally.
Be deliberate when it comes to training and professional development. Encourage young adult children to find non-family mentors. Create opportunities for sharing your business wisdom and decision-making processes with next-generation leaders.
Do build alliances. Make sure the next generation knows your key advisors. Introduce them to the corporate attorney, CPA, insurance and financial planning team, and include heirs in meetings and strategic planning sessions.
Similarly, make sure the next generation knows your professional colleagues. Take them along to conventions and professional association presentations and luncheons. The relationships they form will make it easier as they assume more responsibility.
Don’t underestimate the kids. They may seem like mere babes to you, but if your adult children are old enough to work in the business, they’re old enough to make valid contributions to its success. Listen to their ideas and consider them objectively. Would you accept these suggestions if they were offered by employees other than your children?
Establish standards and set both attainable and “stretch” goals so children know what is expected. Let them demonstrate their capabilities while building credibility with you.
Don’t confuse equality and fairness. Treating everyone “fairly” does not mean treating everyone “equally.” For example, each relative working in the business deserves a competitive salary, but not necessarily the same salary.
In fact, treating everyone equally can backfire. If the superstar performers receive the same compensation and promotion opportunities as the lackluster cousins, the superstars will soon become dissatisfied.
A knowledgeable human resources professional can help create compensation packages that motivate each person according to his or her skills, talents and efforts.
Don’t isolate yourself. It’s not unusual for family business owners to turn to their relatives as their chief source of advice and support. This inward focus is fine, but it sometimes creates a “business bubble” that isolates the company and keeps the business operating the same old way.
To avoid stale ideas and behind-the-times methodologies, it’s crucial that owners stay abreast of trends and changes. Read trade journals, join executive roundtables and spend time with industry leaders to keep your skills sharp.
Of course, you may already be heeding these tips in your family business. If so, kudos to you for your forward thinking. If not, there’s no time like the present to make some changes that will impact the business for the long term.
Our professionals have the depth of experience, industry knowledge and worldwide resources to help you reach your goals. We put your success above all else as your trusted advisor.
Saltmarsh offers a full range of professional services to accommodate your needs – from tax planning and accounting services to information technology and employee benefits consulting.
Saltmarsh serves individuals and businesses. Personal attention, access to the right professionals and rapid response is how we serve.