To be a part of a family business is to be a part of something bigger than yourself. A family business offers a unique work environment, where the people working with you to reach your common goals are people you have known your entire life. There is a level of trust and comradery that is hard to find anywhere else.
Whether your business is just getting started or it has been around for generations, it’s important to know how to run the operations successfully. There’s a lot at stake with a family business, so developing a strong business plan is crucial.
One of the goals of most family businesses is to leave something that will help future generations build a better life for themselves. By creating a business plan that sets your business up for success today, you are building the foundation of a better future for family members you haven’t even met.
Define Company Culture Early
When you are running a business with your family members, it can be tempting to be more laissez-faire with things like company culture, communications, and policy. But by defining your company culture, you can create a sense of uniformity and cooperation.
Defining your company culture has many benefits for owners, managers, and employees, whether you operate a family restaurant or a busy professional services office.
- Boost employee morale: A well-defined company culture helps your employees feel like they belong to a special group of people. That sense of belonging can increase their happiness in the workplace.
- Identify the company goals: Part of defining the company culture is identifying the goals you are all working towards. By identifying these goals and finding ways to reach them, you are setting yourself up for success.
- Improve the onboarding process: New employees will have a clear picture of how your company operates and what their day-to-day duties will be. By defining your company culture, you can set clear expectations for new and existing team members.
Families often have traditions that are passed down from generation to generation. Your company culture is like those traditions. Define the goals your company is striving towards, the values you prioritize, and the practices that make up your daily operations. Once you’ve done that, no matter what changes your company may face over time, the culture and traditions at its core will stay the same.
Diversify Your Business Portfolio
When you diversify your business portfolio, you are spreading out your investments into different asset classes. This allows you to manage the risk that comes with investing by creating a plan for long-standing growth.
There are several ways to diversify your portfolio, depending on your goals and your industry. A traditional retail venture presents different challenges and opportunities than a family business offering services like lawn care or pest control.
- Become a supplier: One way to diversify your portfolio is within your own industry. For example, if you run a bar, you could explore options like creating your own brand of liquor or a craft beer. This product can be sold in your bar, but it can also be sold in other bars and stores.
- Replace your competitors: Investing in additional locations for your business can be a smart move for future growth, especially if these new locations were occupied by previous competitors of yours.
- Move into new industries: Investing in industries that are separate from yours can provide safety in the event of a turn in the market. For example, if you only owned one small grocery store, you might not survive when a big chain moves into town. But if you have investments in other industries (like an online store or a specialty shop), then you have a safety cushion.
Diversification is, at its heart, a way to widen the reach of your company and find new ways to grow for future success.
Learn From Your Mistakes
The best way to build a longstanding family business is to recognize when something doesn’t work how you originally planned. There are many ways to identify what isn’t working and make the necessary changes.
- Foster an environment that encourages employees to express what their experience is like in the day-to-day operations of your business. While you may be making the policies, they are the ones who are putting them into practice and may be able to provide feedback that could lead to company-wide improvements.
- Schedule times throughout the year for company leadership to review company policies and make changes when necessary.
- Learn to not see a mistake as a failure, but rather, as a chance for greater change.
By learning from your mistakes, you can save the next generation of your family from having to deal with the consequences of those mistakes.
Be Transparent About Current Processes
One of the best ways to ease the transition of leadership in a business is to maintain transparency. If your business is passed from family member to family member, you will need to be clear about every aspect of running the business.
This clarity and transparency with customers, employees, and family members helps to build trust. It also means that when the time comes, the next leader of the family business will have everything they need to succeed sitting right in front of them.
Keep a Detailed Expense Log
One of the parts of running a business that people find most challenging is keeping detailed financial records and expense logs. However, when creating a strong foundation for your business, maintaining a high level of detail in these logs is essential.
Select a log format, stick to it, keep track of all expenses, and resolve any issues as soon as they are identified. Financial issues that are put off will only compound and cause more problems down the line.
Set Professional and Personal Boundaries
When working with family, you must set boundaries between your personal and professional life. Just because one sibling has authority in the workplace doesn’t mean that they have authority over other siblings outside of work. Just because you work with your spouse and children does not mean that every family dinner has to be filled with talk of taxes and company policies.
By setting boundaries now, you are making it easier to develop healthy familial relationships.
Hire Outside the Family
Hiring outside of the family allows for the creation of a more diverse work environment. You can bring in people of different backgrounds, which means you are bringing in new ideas and ways of thinking.
In the same line of thinking, it is important that you don’t force family members to work in the family business. Fill your payroll with people who truly want to come to work every day.
Pay Attention to Industry Trends
Even family-owned businesses need to stay on top of industry trends. Today, optimizing your business’s routes and delivery times is essential to efficiency and customer service. Many companies that dispatch delivery or service vehicles into the field strive to automate route management, using new technology and software to do so.
For other ways to cut costs and time, you might be able to take down that old task list or project schedule whiteboard in the staff room and replace it with a more streamlined system. If you’re running a cleaning company, for example, automated scheduling and billing software can help create a more efficient workforce, simplify cash flow, and improve customer satisfaction.
Stay true to the values that your family and your business hold dear, but don’t be afraid to find new ways of operating that can help you grow and increase the chances of your company’s success for future generations.