Attractive in many ways, family business has many pitfalls, especially if you are just starting to do business with relatives.
Define rules
The main mistake of a family business is the expectation that everything will go without saying. Everyone should understand each other without words, but when someone does not do what is expected, conflicts begin. Get together and calmly define the rules of your business: your channel of communication (“I sent an email to you” – “You could have called!”), how often you get together and discuss current affairs, etc.
Separate business from leisure
Working together with relatives, you can easily slip into non-stop work. For breakfast, lunch and dinner, in bed, in the office and in the kitchen you will discuss new supplies, recruitment and bank transfers. It happens to everyone, and the best thing in this case is to agree on the boundaries of working time, which cannot be violated.
Clearly assign responsibilities and positions
The situation when everyone does everything or no one does anything is not uncommon for family business. Even if it is not, it may seem so.
At the core of any well-functioning business there is a clear hierarchical system with prescribed job duties. This allows you to make your business more “business-like” and less “family.” Thus, a person is entitled to sign and make independent decisions only if everyone agreed on it, and no one will be offended that he or she has not been consulted.
In addition, it is important to identify the boss. If everyone is in charge, it is not a family business, it is chaos.
Adjust financial issues
Who is financially responsible, who is entitled to sign, who is the contact person for the bank? What is the salary of each employee? Who and on what conditions can take money from the business and how much?
All the other matters related to money should be carefully regulated. Otherwise financial liberties can create suspicion in the team and destroy the business sooner or later.
Document the agreements
The above-mentioned hierarchical structure, the financial arrangements, and the agreements between employees need to be documented. If you do not want them to be certified by a disinterested person, then you should at least write them all down. Otherwise, you will not avoid talks like someone said he would finish on the 6th and someone heard the 3rd, someone went on vacation earlier, etc. – it will disrupt normal work.
Do not confine the business to relatives
It is believed that family business should involve only relatives. For a family business, it is enough to have a family in charge (at least 51% of assets), while the rest of the work should be done by specialists, even if they are not related. The main thing is that everyone involved in that business be well qualified.
It is worth remembering that family business is a big test for the family and relationships. After all, money puts everything in its place. To run a family business, you will need to work twice as much on yourself and your family. Indeed, you can always fire an employee who disappointed you, but if it is relative, you will have to tolerate him or her not only at work but at home, as well.
Still, with the right approach, family business is a great thing. After all, the main resources remain within the family; you do not obey and do not pay money to someone for taking the lead. The next generation will always have solid ground under their feet. However, they should not be imposed anything, or it may cause quarrels.
10 Commandments of the family business, which need to be repeated constantly
- The business is common. Therefore, strive for mutual understanding, rather than the satisfaction of personal ambition. Explain and ask but not order or blame.
- Family business is a commercial enterprise, so professionalism is above relationships.
- Business purpose is higher than discussing people.
- People in the family business are not forever. People change, their goals too. This is normal, so respect this law.
- External adviser is very necessary for family business. Unprejudiced view will help understand many issues.
- In a conflict situation, first determine whether it concerns family or business.
- Constantly ask yourself, how you would behave if this person was just your colleague, not a relative? This will help you work out the right reaction.
- Be able to admit your mistakes and leave when it is necessary. The family is a price too high for any business.
- Boss’s authority is very important. In many companies, work is done only because the chief has the authority. If you do not have an authority in a family business, your business is in danger.
- The company’s money and your money are two different things. All financial matters should be negotiated, up to the last penny.
