Best Practices for the Family Business
How hard can it be to run a family business? It should be easy since presumably all the key people are on the same page and they all share the same goals. Unfortunately, that’s not always the case. Running a family business is anything but easy when what’s good for the business is different from what’s good for the family.
Communicate Clearly and Often
There are two controlling forces in a family business — the family and the business. Successful family businesses find an effective way of separating the two so that family problems don’t spill over into the business and vice versa. Keeping the lines of communication open on all levels and holding regular business meetings to address and resolve business issues will help establish the necessary boundaries.
Focus on Professionalism
Professionalism is another best practice for family businesses. Standardizing operations and procedures and establishing policies can help your family business be successful. If you have nonfamily employees, pay particular attention to personnel issues (such as hiring and promoting on merit and paying market-based salaries). Allowing “special” benefits for family members can be a real morale killer. Providing equal benefits and establishing a family code of conduct will show you’re committed to leveling the playing field.
Pay Attention to Finances
One big reason family businesses sink is poor financial management. All businesses can benefit from establishing proper accounting procedures. Having accurate data allows you to generate monthly statements and keep tabs on your current financial situation. You can also spot trends as they develop and be proactive instead of reactive.
The odds of a family-run business making it to the next generation are generally low. You can boost the likelihood of beating the odds if you make succession planning a top priority. Just don’t wait until the last minute.
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