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Raising a Family Empire is not As Easy as 1-2-3: 5 Tips on Managing a Family Business
Nothing tastes quite as sweet as working towards a shared goal and attaining success with the ones closest to your heart. However, the bickering and the hardships that can occur in such an emotionally-charged business set-up can be quite the challenge. Avoid these common pitfalls and let your family business reach its full potential with these top tips.
1. Hire for Skill, Not for Memories
You wouldn’t hire an unqualified person for the job, why should it be any different for family. Make sure each and every family member who is part of the business clearly deserves to be there. Hire according to credentials and potential contribution. It may require immense discipline and objectivity on your part but setting it up as a professionally-run business from the get-go will pay off in the long-run. You may have wonderful childhood memories of that lemonade stand you and your brother set up, but if that was any indication, he might not fit the company accountant post but he may be good in handling sales or operations. You always have to draw the line between your personal and professional relationships.
2. Diversify and Formalize
Having been raised in the same household, in the same community, with the same perspective on things can be quite limiting for family-run enterprises. If you feel that you somehow ‘lack’ expertise to enrich the business process it is best if you bring in consultants that can give their expert advice and service. Also keep in mind to hire employees that are not related to you, and who together with your shared family vision, can jointly deliver better results for customers. Ideally, leadership should be chosen based on qualifications and not degree of relationship (or favoritism for that matter). As for verbal discussions, contracts and agreements should be done in writing – ‘pinky’ promises will no longer cut it.
3. There's No Such Thing as a Free Ride
To avoid confusion and lackluster performance, set clear distinct goals for each family member as you would a regular employee. Clearly establish job titles and roles with compensation adjusted accordingly. Formalize the management structure, outlining the reporting mechanism and individual responsibilities. Always make it a point to treat all team members equally and avoid special favors based on membership in your family tree.Relatives shouldn’t abuse working hours, borrow the company car for private errands, nor charge personal trips as a work expense. Get tough. Business is business.
4. Logical Decisions Make Good Business Sense
If after following the above you continue to have a non-performing family member on the company payroll, it may be time to consider prioritizing long-term objectives over blood relation. He or she is clearly not suited for the business – either they shape up or ship out. Your other family members, the rest of your employees and the company as a whole may well bear the brunt if this continues any longer. Do not let emotion overrule sound decision-making.
5. Think Longevity
Being part of the family legacy, you would want your business to survive through the next generation and beyond. Having a succession plan in place will ensure a smooth transition. In preparation, family members who exhibit strong potential and are deemed worthy to take over the reins should be given adequate training and mentorship in due course.