How can you successfully manage and grow a family-run business?
If you’ve watched TV shows like Kitchen Nightmares, all you see are families that fight and are being torn apart because of the business.
Fortunately, what you see on TV isn’t reality. The truth is that there are plenty of family-run businesses that are thriving.
They make up about 64% of the gross domestic product in the U.S. About 30% of them last long enough to hand down to the second generation.
If you want to grow your business to reach the third generation and beyond, keep reading to learn how.
How to Thrive in a Family-Run Business :
A family-run business is much different than having a business and employees that you’re not related to.
During good times, family-run businesses don’t outshine other corporations. When hard times fall, family businesses show resiliency. That’s because the focus is on survival, not just on maximizing profits.
Here’s how you can create an atmosphere that ensures that everyone gets along inside and outside of the business.
Identify the Decision Makers :
In most companies, there’s a clear hierarchy of decision makers. There’s the CEO, vice presidents, managers, and employees.
In a family-run business, those lines can get blurred. Right from the start, identify who the key decisionmakers are.
Create an organizational chart that shows who is responsible for what, and how major business decisions are made.
Every person in the business, whether they’re family members or not, should have job descriptions along with very clear roles and responsibilities.
It’s also important to have a continuity plan in place in case something serious happens to one of the key decision makers.
If there are financial decisions that need to be made, give everyone some leeway to make decisions up to a certain threshold. Above that threshold, they need to get approval from someone in management.
The best thing you can do is to have them written down and agreed upon before you start your business. If you’re already in business, get this done immediately.
Know Everyone’s Strengths and Weaknesses :
Everyone at the table has certain strengths and weaknesses.
When you go through this exercise, have everyone identify their own strengths and weaknesses. Then have everyone else do the same analysis for each other.
You’ll notice some patterns in the strengths and weaknesses. This way, you’ll be able to have the right person manage the right aspect of the business.
If you find that your weakness is handling money, but someone else has that as their strength, then let them take over bookkeeping duties.
Have Regular Meetings :
In any business, communication is the key to a successful business.
Communication matters even more in family businesses. Because families that work together tend to be tight-knit, there’s a reluctance to say what’s on your mind for fear of rocking the boat or hurting someone’s feelings.
These things that are left unsaid can build up and cause even more conflict down the road.
Establish regular meetings to clear the air and get out what needs to be said. Have a rule where if someone is being critical of someone else, it needs to be said in a way that is constructive, not as an attack.
A general ground rule is to start with something positive, then say I noticed you are doing (whatever the behavior is). What I’d like to see is (whatever the desired behavior is).
When you address things in this way, it makes it easier for the other person to hear and reduces the chance of conflict.
Leave Everything at the Office
The most difficult part of having a family run business is the prospect of always being at work. That’s a common situation for entrepreneurs in general.
In a family-owned company, you can’t get away from work. If you go to family functions, you’ll run the risk of having an in-depth conversation about work.
You have to set good boundaries with other family members and decide when it’s appropriate to talk about work, and when to leave it until later.
If you don’t have good boundaries, you run the risk of getting burned out quickly.
Follow Other Family Business Examples :
The best thing you can do to grow your family company is to learn from those who have been at it for a while.
Did you know that some of the world’s biggest companies are family-run businesses?
Wal-Mart, Porsche, and Samsung are billion dollar companies and they’re family owned businesses.
You can learn from their example and from other smaller companies, too. Click here to learn more.
Use Your Status as a Marketing Message :
There’s a certain cache to being a family owned and operated business. Most people immediately think of a small mom and pop shop when they hear it.
Being a family run business also puts a lot of heart and a face to the company immediately.
For example, Bob’s Red Mill started out as a small family business in Oregon. It grew to become a huge grain and flour producer in the U.S.
They have over 600 employees but still, maintain that the family-run business feels. That’s show in their marketing messages, even though they’re a huge company.
That makes the company more relatable and puts a face and a name for the company.
On the flip side, being labeled a family run business can be a detriment. Most people think of a small business that’s not very professional when they hear family run business.
If you’re a small business that’s a husband and wife team with a couple of older kids working the business, you’ll only reinforce that.
People will be reluctant to do business with you because they don’t know if your business will be around in a couple of years.
If you’re a small business that’s not very professional, then hold off on calling yourself a family run business.
Grow Your Family Run Business :
Your family run business can be in a position to be handed down for generations. You have to know how to set expectations and understand what everyone’s role is at the company.
Once you have these roles outlined, it’s important to have the communication skills and flexibility when needed.
That’s what makes a successful family run business.
Check out our small business blog to learn more about how you can grow your business.
Read Also :
- 5 Benefits of Running a Business From Home
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- Tips For Keeping Your Small Business Running Strong