How To Successfully Manage A Family Business
Managing an enterprise on your own is challenging enough on its own. Managing a family-run enterprise with members of your immediate and extended family is potentially nigh on impossible.
On the flipside however, when managed properly and professionally, a family-run business has the potential to be a powerhouse of profitability. This is because family members understand one another on a personal level and the typically higher levels of trust allow for a better decision-making process.
So why is it so that more than one family business has collapsed on occasion?
For starters, most family-run businesses are dominated by single figure or figure(s) who control all aspects of the decision-making process. Business partners i.e. family members are treated as mere employers only capable of taking instructions.
On the long-term, the lack of any type of succession planning results in there being a lack of capable managers able to carry on the business. By failing to plan, the business owners have inadvertently planned for failure.
So if you’re looking to take your family business to the next level, here are some proven tips to help you get started on the road track.
1. Hire Professionals
Just like any other business entity, family enterprise is a complicated machine that requires skilled managers and workers to ensure it’s smooth performance. Unfortunately, most business owners have admitted to a desire to keep the wealth “inside the family” even at the cost of productivity.
Managing a business team it’s somehow similar to managing a team highly ranked in the NBA odds. You need to take decisions and sign professionals that deliver, so you can achieve your goals without going over the budget.
Hence instead of hiring capable and competent managers, family members are picked to fill roles that they may not be suitable for. Because of this, the business suffers from a lack of competent employees and leaders.
This is a situation which is particularly endemic in small-to-medium businesses where the owners are reluctant to pay for the services of a skilled manager from outside the family circle.
Such outdated ideas have hamstrung more than one business on several occasions. Instead of trying to keep things within the family, business owners should consider enticing outside professionals with attractive salaries and benefits.
By building up a core of skilled and capable employees, business owners will be able to ensure that the heritage and future of their enterprise is secured.
2. Set Boundaries
When working with family members, it’s always important to ensure and adhere to a set of predetermined boundaries. This ensures that things at the office are kept professional whilst keeping personal issues out of the office.
For example, having worked with family before, this writer can attest to the sheer discomfort of having family arguments break out at the workplace. This sets a bad precedent for both family and non-family employees who may also be working.
Instead, business owners should opt to maintain a professional atmosphere at the office. Any personal issues and disagreements should be settled in the home and not the workplace.
3. Avoid Nepotism
When a nephew or daughter of the owner with no real experience suddenly lands a senior management role within the organization, questions of nepotism are sure to follow shortly.
While some business owners argue that all decisions are solely at their discretion, this can have a detrimental effect for non-family members working in the business. Non-family employees may become demoralized or even discouraged as this can be perceived as outright nepotism.
Consequently, the lack of career advancement will without a doubt drive away more capable employee. Business owners need to take the stand that the business functions as a profit-making entity and not a job provider for errant family members.
This does not mean that hiring family members is taboo. Instead, business owners need to ensure that the candidate vetting process is as transparent as possible.
4. Have a Succession Plan
Typically most business owners would like to remain active in the business for as long as possible which often means that succession plans are overlooked or even ignored.
This can leave the organization in the woeful position of not having a competent team of leaders to bring the business forwards. On the long-term this will undoubtedly severely affect the company’s ability to remain competitive.
Hence business owners must be proactive in their search for a replacement. This can include grooming selected employees or family members to take up the mantle of leadership. Having a clearly defined succession plan eliminates any uncertainty and can even discourage any kind of power struggle.
Whether business owners choose to draft their own succession plans or enlist the aid of a professional, the choice is up to them.
Family businesses are complex affairs and oftentimes poor management can lead to their downfall. By taking the right steps, entrepreneurs will be able to secure the future of their enterprises.