Managing a family business can be challenging. It often requires a careful balance of work life and personal life. Establishing boundaries and fine-tuning roles is the key to long-term success. Remember, the people you work with will also be the people you share a dinner table with. That’s what makes the dynamics of family businesses so special and unique.
In this piece, we’ll be discussing:
Key Topics to Look at When Considering “What Unique Challenges Do Family-Owned Businesses Face?”
Setting Compensation & Benefits
Determining pay and benefits is always an important step when starting a business. It can be even more important when you’re running a family business because you don’t want to end up paying a family member for doing little work, no work, or bad work. It can create problems with your other employees who aren’t relatives and even those that are. Salary and benefits need to be set according to the position and not your relationship to the person.
Company Culture
The values of a family-owned business are typically that of the owner. Studies have suggested that “clan culture” is common in family businesses, and loyalty and tradition are the most highly promoted values. When you’re thinking of bringing on some new people from outside the family, these types of strict values can make it difficult for them to feel comfortable. You’ll need to review these values to stay relevant in the current marketplace so that people who aren’t related to you will feel equally welcome.
Separate Business From Pleasure
Small businesses are often tight-knit, with co-workers who care about each other. But when those people are actually family, through blood or marriage, unique issues can arise. Making business decisions and operating without bringing personal feelings can be challenging. You have to work hard to keep business concerns in the workplace and ensure family members don’t get special treatment. On the flip side, you’ll also want to be sure that family conflicts don’t creep into the workplace.
Generational Problems
Different generations running a business can be a great thing. Having younger generations brings in new ideas, and having people with experience can benefit training. Young family members can help the business adopt new technologies, and older members can help with thinking of ways to integrate into the most important aspects of the business.
However, it’s important to encourage that forward momentum and not hold younger generations back from changing things. Each generation has something to offer. Approach your daily business operations from a place of “active listening,” where you not only hear the words but also take in their message. Change isn’t bad, and guidance from experience is useful.
Succession Planning
SCORE reported that only 30% of family-owned businesses move on from the first to the second generation, and only 12% from the second to the third. But a staggering 47% of owners expecting to retire within the next five years haven’t appointed a successor. As the current owner, you must decide what you want to do with it when you retire or what happens when you die. Whether it stays in the family or not is up to you, so you have to be prepared and have a plan.
5 Steps on How To Manage the Challenges of a Family Business
1. Developing Leadership Roles
Leadership roles are vital in any business. Like any company, a family business requires strong leaders who are goal-driven and determined. Establishing a clearly defined leader in a family business can be a little tricky at times.
Many times, family members often feel their role in the company should be equal to everyone else’s. Keep in mind that it is possible to respect other people’s opinions and value their input even if they aren’t a leader. A ship always has a captain who can ultimately take charge and delegate tasks, and there’s no reason a business should be any different.
Some of the most successful leaders are the ones who lead by working alongside their employees. They understand that though they have more decision-making power, they are not above anybody. The best leaders aren’t afraid to come out from behind their desks and get their hands dirty. They lead by example and never ask their employees to do something they wouldn’t do themselves.
Leaders can be established for various aspects of the business. You could implement a production leader, a recruitment leader, and a customer service leader. These branches of the company can be delegated equally important responsibilities. They’ll be tasked with acting as liaisons for their respective areas of expertise and collaborate to make joint decisions for the company.
2. Manage With Mindfulness
When it comes to managing a family business, pinpoint what everyone’s expertise is. Everyone is better at certain things and may lack in other areas. Resources, time, money, knowledge, and experience, must be delegated appropriately.
Family business leaders often grew up in the family business and therefore had very strong opinions about how things should be done. Some people lead with the idea, “If it’s not broken, don’t fix it.” It can be especially true in family businesses that put greater emphasis on tradition.
Don’t be afraid to listen to new ideas or try new things. Younger family members may be more in touch with ideas to grow your company’s reach.
Unitary leaders can do amazing work, but when it comes down to it, there are only so many hours in a day. One person cannot be expected to do everything. Delegating tasks to others will not only allow for a healthy work/life balance but also enable the company to be more productive and operate more smoothly.
3. Set Clear Boundaries
Entitled mindsets can be common in family businesses. It’s also common for roles and boundaries to be murky and easily overstepped. Success hinges on clearly established boundaries, policies, and roles like any business.
Determine clear core values and standards and hold all employees accountable to them. Your company’s reputation rests upon these values, so all employees must represent your beliefs.
Make sure everyone within the business knows what is expected of them. You should clearly define each role, so there are no gaps or overlaps in work. It ensures efficiency and the greatest return on effort.
4. Set Goals And Create A Plan
Determine the needs of your business and then set goals to fulfill those needs.
Goals should be attainable, realistic, and have steps to achieve them. Identifying where your business needs to go can be a great way to access untapped potential.
Good leaders inspire and motivate their employees to attain the goals set for themselves and the company. Family businesses are obviously in it for the long term, so they should have long-term goals.
5. Bring In Outside Opinions
Implementing a shareholders’ council, a board of directors, or a family council is a great way to bring in an outside point of view. Collaborating with advisory groups can also take the power balance aspect of management away from one particular family member.
Shareholders’ councils help to give a voice to the owners. A board of directors addresses the needs of the business and the owners. Implementing a family council gives the family a voice and acts as a liaison between family members and the business itself.
