Are you thinking of starting a business with spouses, children, aunties and uncles? Family businesses can be very rewarding and a legacy to pass down between generations, however, where do you start? Aside from the company registrations, legal and financial requirements, how do you set a presidency for family business matters?
Pierce look at a few simple things that can help you set your charter;
- Assess family members’ skills. Look at the talents, experience, strengths and weaknesses of each one and determine the best role for each. Gaps in experience or skills need to be filled by employees outside the family.
- Have a candid discussion about risk. If three brothers for example were all going to invest money in the company, they each must understand there is a risk of losing the investment. Find out everyone’s attitude toward risk and whether they can accept possible failure.
- Decide whether your personalities mesh. Determine whether you can work together in harmony. Families may have interpersonal and cross-generational conflicts. Make sure these are manageable.
- Make certain all family members, not just those who will be working in the company, recognize the difficulties and sacrifices necessary to start a business. They may face a reduction in lifestyle because the company will not generate lots of money right away. Starting a company is time consuming. Family members may be away from home more than their spouses would like.
- Obtain a commitment. Make sure all the family members who will be involved are enthusiastic about the venture and not doing it reluctantly or out of a sense of obligation. Any startup company requires the total commitment of everyone involved.
- Make sure the organization is structured soundly from a legal standpoint, and issues, such as ownership shares and procedures for liquidating shares in the event a family member leaves, are worked out in advance, so there are no hard feelings later.
- Create an organizational structure. Make sure all the family members understand the scope of their responsibility and their decision making authority. Conflict can be minimized if everyone understands their role–and when not to interfere with other family members’ roles.
- Separate family from work life. Make sure non-family employees are treated just as fairly as family members, so there is no resentment among the non-family employees.
Have the family members who will be working in the company work together on the company’s business plan. If all members of the team are in agreement about the company’s direction–which is spelled out in the plan–conflict can be avoided and priorities can be established. Make sure all family members share in the company’s successes. When an important milestone is reached, recognize everyone’s contribution, no matter how modest it may have been.
Changes in family dynamics are bound to occur over the course of operating a family run company. The younger daughter may turn out to be a much better manager than her older brother, which will alter the relationship they have had growing up. Dealing with these issues in a sensitive manner can help keep the team working in harmony. Let everyone express their frustrations, get feelings out in the open and then move on.