Most entrepreneurs go into a family business expecting there to be challenges. However, they often don’t realize from the outset exactly how tricky things can get. Collaborating and communicating with coworkers requires effort in any business environment—but when you bring family ties into the equation, that effort has to be multiplied if you want to keep your home life harmonious and your business moving toward success. If you have a family business or you’re interested in starting one, check out the tips below.
Establish a hierarchy
When you’re just starting out, you might be working under the assumption that all things will be equal between the various participating family members—equal authority, equal work, equal pay. However, this assumption doesn’t always play out so well. Depending on their level of expertise and commitment, certain family members will inevitably contribute more or less to the business. While giving everyone an equal cut might seem fair in theory, conflict is bound to arise when family members contributing a little bit more feel like their work isn’t being rewarded. As a result, consider establishing a hierarchy right from the beginning. Try to create just policies that make it clear how different positions within the business will entail different amounts of work and different rates of compensation, which will help you and your family members maintain healthy working relationships.
Plan for succession
Every entrepreneur should be mindful of what will happen to their business after they retire, but family business owners should approach succession with particular care. Inheritance can be a major source of contention between grown siblings, so it’s recommended that you develop a succession plan in order to ensure the transition occurs smoothly without interpersonal conflict. Additionally, a succession plan can ensure the business’s wellbeing. Only 20% of family businesses survive to the second generation and only 12% survive to the third generation, and a lack of planning is often cited as one of the major causes of the business going under. For more information on succession planning, check out this great resource from Canada Business Work.
Resolve conflict with care
Conflict is inevitable in a family business. We’re often a little quicker to speak our minds with family members than with typical coworkers, which can make family businesses a hotbed for discord. At the same time, it’s important to remember that conflict in a business environment isn’t always bad. By being open and honest with our feelings, we create an opportunity to tackle interpersonal issues head-on, which ultimately results in a stronger organizational team. However, this only works when you know how to resolve conflict carefully and effectively. It’s important to reflect on the ways you handle conflict so you can develop new behaviours that can help everyone establish unanimity and move on. For more information about workplace conflict resolution, check out this article from Forbes.
Maintain a home/work division
Arguably the biggest obstacle entrepreneurs face when they try to embark upon a family business has to do with boundaries. When you’re working with family members, it’s tempting to bring business talk home with you. However, when that kind of dynamic is left unchecked, the home/work divide can dissolve to the point where you’re left with an undeniably fraught living situation. As a result, consider establishing firm boundaries between these two worlds. You might even want to establish a blanket ban on business talk at home. Alternatively, if you’re running a home-based business, you might want to set a moratorium on business talk after a certain hour. These kinds of restrictions will allow you to maintain a healthy division between home and work, which will keep you and your business running strong well into the future. Check out our recent blog post on maintaining a home/life division for further insight.
Related SBA content:
Family-owned business resources, Off the Ground Blog (20 October 2011).