What’s the Secret for a Successful Family-Run Business?

Mixing personal and business needs to be carefully coordinated

by Liz Agboola 

Being an entrepreneur is difficult enough on its own, but adding a family to the mix creates another layer of challenges. Many family businesses struggle for a variety of reasons, including personal and professional conflicts, management hurdles, emotional stressors, lack of structure and a general loss of interest from one generation to the next. While family businesses encounter the same issues as organizations that aren’t run by relatives, confronting challenging family dynamics adds an extra layer of complexity and can be far more difficult than managing a “conventional” system.

Below are tips on how to successfully grow a family business, avoid burnout and keep everyone on track and (somewhat) happy.

Establish open, honest and consistent communication channels. Communication is essential in any business or relationship. Clear communication is critical to the success of a family business. Don’t make the mistake of assuming that family members know each other so well that no formal discussions are required. One of the reasons family businesses fail in today’s competitive business world is because of this. Consider holding weekly meetings to discuss progress, action items and any conflicts that may arise. Establish a system for members who are late or do not show up. ($20 for every five minutes late; they pick up the tab at the next family function; he/she dresses up as Santa for the next family function; and so on).  

Define roles and duties clearly. Going into business with family may be difficult, and the lines between love and business can be blurry at best. It’s also common for family members to get sucked into a family business without having a clear idea of their long-term gain. It’s critical to explain individual roles and duties, clearly define expectations and ensure that everyone is on the same page to avoid wounded emotions or misinterpretation. Before signing on the dotted line, make sure to write formal job descriptions, define compensation and iron out every last detail. Having a clear plan and knowing who will be responsible for what will assist in getting the business up and running and will allow everyone to spend less time worrying about who will get the corner office and more time servicing the client. 

Hire for the job, not the individual. Many family-owned firms make the mistake of putting a family member into a role for which they lack the desire, credentials or interest. To no one’s surprise, this model rarely works. Instead, employment positions should be filled by someone who has the necessary credentials, expertise and track record of accomplishment. For talents and expertise that family members lack, the most successful family businesses turn to an outside talent pool. If there is a family member who is interested in the family business, bring them into an entry-level position and have them work their way up the ladder by demonstrating their enthusiasm to learn. For those who desire positions they are currently unqualified for, have them shadow those who are qualified so they are exposed to that line of business. 

Make a special effort to treat non-family personnel fairly. In a family business, it’s normal for non-family employees to believe they’ll never grow or enjoy the benefits that family members do. Because non-family personnel are necessary for a family business to flourish and develop, successful family-owned firms will treat everyone like family, whether they are related or not.

Establish certain boundaries. It’s simple for family members involved in a firm to discuss shop 24 hours a day, seven days a week. However, combining work and personal life too much might lead to burnout. Setting limits is crucial to creating and maintaining success, as leaders of thriving family-owned businesses know. I propose keeping family matters out of the boardroom and limiting business discussions outside of the office as much as feasible. It’s easier said than done, therefore appointing a point person to ensure that everyone remembers this is vital.

Be logical rather than emotional. When dealing with a family member, it can be difficult to maintain objectivity. Feelings can be quickly hurt, and it’s a typical reaction to become defensive with someone close rather than taking the time to consider the situation from a logical standpoint. Ask yourself, “How would I handle this scenario if I were dealing with a non-family member?” before coming to a decision. Asking 

oneself this question each time a decision needs to be made will train one’s mind to think logically, making it simpler to deal with more emotional circumstances in the future.

Be objective. In a business, disagreements are unavoidable, no matter how much people love each other. If a workplace quarrel arises, it’s important to keep things formal and handle it like a business. Family spats, on the other hand, should be kept at home. It’s best to encourage family members to iron out their differences outside the office and avoid getting involved. In a family business, a common problem is putting too much emphasis on “family” and not enough on “business.” It’s crucial to present a united face in the workplace.

Early on, involve youngsters in the family business. Allow younger family members to acquire a taste of entrepreneurship by having them work for the family firm during their summer vacations or as a part-time employment (aka, free labor). Ascertain that they have the opportunity to learn about various elements of the organization. Getting hands-on experience will help students decide whether or not they want to work in the industry when they finish their studies.

Seek outside help frequently. Outside counsel are sought by successful businesses. It’s critical to keep learning, evolving and asking others for guidance on how to get to the next stage of success, whether it’s to help the business detect blind spots, set goals or work through difficult interpersonal issues.

Outside of the office, make time for each other. All work and no play will actually have a negative impact on the business and relationships with family members. Make time for true family time and simply enjoy and appreciate one another as people.

The bottom line is that we can have a lot of friends but only a limited number of family members. Ruining family relationships over trivial disagreements isn’t worth it in the end. In leading a family business, it’s important to make sure to maintain regular, clear communication and discuss issues even if they are minor. When they get big and everyone gets emotional, it’s difficult to agree on much. For families that do not constantly remind each other that they are loved and appreciated, start with a simple, “I love you” at the end of every phone call. It has a big impact  

Liz Agboola is the CEO of three family-run organizations: Senior Placement Services, Moses Behavioral Care and FreshStart. She is a mental health and homelessness activist and philanthropist who has successfully spearheaded community efforts to ensure suitable housing is available for vulnerable veterans and homeless individuals who are unable to live independently due to medical or mental health conditions. She holds a Master’s in Education and Master of Business Administration.

Speak Your Mind

In Business Dailies

Sign up for a complimentary year of In Business Dailies with a bonus Digital Subscription of In Business Magazine delivered to your inbox each month!

  • Get the day’s Top Stories
  • Relevant In-depth Articles
  • Daily Offers
  • Coming Events