Family members living and working together might seem a good idea, but there are numerous risks. So what are the secrets of success?
"Family businesses are bound together by more than just commercial interests," says Grant Gordon, director general of the Institute for Family Business. "This can make them stronger, but such closeness between people in a business can be a pitfall," he warns.
"When family businesses work, they're great. When they don't, problems can become exaggerated. The key is recognising that family-related disagreements could happen in your business at some stage. You need to take steps, before your workplace and home become battlegrounds."
While families are unique, the problems family businesses face are surprisingly similar. Typical conflicts include recruiting other family members, communication and issues around succession.
Recruitment
"A job in the family business is an opportunity - not a birthright," says Gordon. "If you're employing a relation, make sure there genuinely is a job for them, and that they're qualified to do it."
Gordon's organisation recommends that family members work in other businesses before they join the family firm. "Not only does their previous experience bring new ideas and perspectives, non-family employees are less likely to feel passed over or aggrieved. Warn the new recruit that they should be prepared to work harder to prove themselves, and that their pay will be based on the job they do."
Successful communication
Running a business can be stressful, especially when workloads are demanding or when important business decisions need to be agreed by family members.
"Encourage calm, open discussion," says Gordon. "Make sure everyone gets a fair hearing, even if you don't agree with them. Always focus on business objectives - not the personalities of those involved.
"It takes time to build up good working relationships, and those with your family are no exception."
For family members who live together (including the familiar husband and wife team), it can be wise to have strict demarcation lines between work and home. This means agreeing to not discuss work issues in the home or refusing to let domestic issues enter the workplace.
Family planning
Succession is probably the biggest challenge for many small family businesses. It is wise to start preparing for succession anywhere from between two to ten years before you want to retire.
"One of the most frequent problems we see is the entrepreneur who believes he or she is the only person who can run the business," explains Gordon. "They delay choosing or training a successor, which leads to trouble down the line."
When choosing a successor, discuss your choices with others and, if you want what's best for the business, don't allow emotion to cloud your judgement. Choose your successor on their ability to manage the business successfully.
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