Running a family business has its share of challenges. Yet research shows that a family-run business has significant advantages when compared to other firms.
Family-owned firms make more money, and outperformed non-family businesses by 5 percent this past decade, according to a study by Credit Suisse. Family-centered organizations have other advantages. Leadership tends to be more loyal to the business, which makes things more stable. And with that, their eye is more focused on the long term, prizing quality over winning short-term profits.
While it’s good to know there are business advantages to going in as a family, it’s important to manage the actual family side of the equation. That is, if you’re working and leading alongside family members, it’s important to strike the right balance that respects the personal relationships while helping the venture succeed.
* Even the most easygoing family isn’t immune to flareups, conflict and even a hint of drama. Which is why it’s important for any family operation to establish boundaries between work and home. It can be helpful to have that long discussion about coming to an agreement about roles and procedure — and making sure everyone sticks to the agreement.
* Throughout the work day, family dynamics, when left unchecked, can make it a tougher-than-usual environment for someone to succeed. When everyone clocks in, it’s time to set aside the family history, and make an effort to respect each other’s professionalism and understand the unique challenges of their daily roles.
* If there are other employees in the business, be above board when it comes to promoting younger family members to management and leadership roles. While there’s nothing wrong with grooming a relative for an eventual takeover, the last thing you want is to alienate and lose a talented, valuable member of the team only because they don’t share a last name with you. Be fair and consistent when it comes to hiring, firing and conducting performance reviews.
* Sometimes, generations can clash, and the classic scenario is one where the younger generation is pushing to change things up and innovate, but the more experienced generation has more, shall we say, tempered expectations. When fresh ideas come up, everyone should come to the table with the intention of keeping communication open and honest, while looking for a compromise that benefits everyone — and the company. For example, is there a low-risk way to test-drive and evaluate the new idea?
Whether your family business is ready to expand, or looking for ways to become more productive and profitable, Minnwest Bank has the expertise to help you find the best solutions. Contact one of our expert lenders today.