By Terry A. Findley
First of all, since you’re looking into the topic of how to start a family business, you need to be congratulated for the initiative itself. In today’s shifting business field, a small-scale family owned and operated company is both a courageous prospect, but at the same time a safe bet (if handled wisely) and a welcome presence within the local community. Family businesses can really change the world for the better and create a lot of good ties inside the family as well, if done right.
Of course, to make sure your enterprise will be successful on all fronts, you need to plan ahead and figure out a way to deal with all the challenges a typical small family business will face. Here is an overview of these challenges you need to manage.
1. Come up with the idea and prescribing roles.
If you want to start a family business, you probably already have an idea about what you want to do together. Even so, the idea itself probably could use some calibrating nonetheless to make sure it’s very clear what you can do together as a group in a successful way. Have a long and clear discussion with everyone about each person’s competencies and prescribe roles: who will handle what as well as any other professional would and so on. The areas that aren’t covered will need to be handled by employees hired from outside the family.
2. Lay out a clear organizational chart.
To avoid future disagreements or tensions, all the matters of going into business together need to be properly laid out from the beginning. Make sure everyone understands the risk of investing in the business, make sure there is a safe and agreeable exit route for each member of the endeavor should they wish to get out of the business at some point, that each person understands his or her exact area of authority and decision-making, and that these areas don’t overlap too much.
3. Make certain legal and fiscal matters are properly handled.
Just as you need to make sure the clear plan of the business is laid out in the beginning to avoid future complications, you also need to make sure the everyday legal and financial aspects of the business are properly handled. This is one of the most common struggles of small family businesses, since the bureaucracy of keeping the books and so on can be quite a maze. You don’t have the luxury of a whole department to take care of these problems for you, but you can be aware of the risk and pay extra attention to how these matters are handled by the appointed person(s). There’s no need to be necessarily overbearing or to hover over the responsible one’s shoulder, but discuss the matters beforehand so everyone understands how the legal and fiscal aspects of the business will be handled and what their individual responsibilities with regard to these matters are.
4. Balance the family relationships once the business starts.
It’s no secret that sometimes working together can take its toll on an otherwise good relationship between friends, spouses or relatives. To make sure the pressures of work don’t ruin a good relationship, communication is the key (as much as it sounds like a motivational cliché). Make sure everyone involved understands the pressures of working together, and that a potential work tension should not be taken personally.
Potential family tensions such as generational conflicts can also affect the way people work together or the trust they put in each other in matters of work. Make sure you put each person in a good role that matches the roles of the other family members, so that everything can run more or less smoothly. Make sure the family members who are not directly involved also understand the pressures likely to derive in the beginning (like the sacrifices a start-up requires, or the extended work schedule of their spouses and so on).
5. Face up to the competition from larger companies.
Last, but not least, once all these internal affairs are handled and you can begin to call yourself an actual micro business in your own right, the major pressure you will face with the exterior business environment will be the threat of major competitors. The secret in handling that is not to worry too much about the details where you know you can’t beat them: a corporate-scale actor will always afford to make cheaper offers than you and so on. You can’t really compete with that without going out of business before even gaining a foothold in the market. Therefore, just focus on what you have and they don’t: the unique personal component that your family business brings to the scene, and the community-like feel behind it all. Give it your extra and your clients will soon feel that and will prefer working with you, where they know they benefit from your full attention and personalized details.
Terry A. Findley is a businessman, father, and husband. He currently helps to operate over 400 websites such as salespromotion.org He enjoys writing and designing the most.