NFIB

Help Your Family Business Run More Smoothly
08/ 21/ 2003

by Jeffrey Moses

The deep-set relations often found within a family can serve as the foundation for successful company growth -- or it can become the basis for arguments and grievances that can endanger the expansion or long-term existence of a company. To avoid this -- or at least to minimize the chances of disruption -- keep the following in mind when running a family business:

Senior family members should work closely with others in the family to make sure that they have the chance to assume responsibilities that interest and challenge them. Too often, junior members of a family business are assigned routine tasks that end up boring them, eventually driving them from the company. It's important to realize that just because someone is in the family, they are not obligated to perform jobs that are unrewarding to them. Employees who are not family members would not be expected to work beneath their interests and capabilities. Family members should not be expected to do so, either.

Family members should become involved in the family business at the earliest age possible, allowing them to grow naturally into the positions for which their education and interests best suits them. Young children, of course, will need to be given elementary tasks -- but even these can help instill pride in the company and a desire to work closely with the family.

As children progress through their teen, college and post-college years, they may want to fly on their own wings for a while by working somewhere else. Eventually, they may return to work with the company. If too much pressure is put on them during these developing years to work with the family business, though, resentments may run deep, making it hard for them to return.

Senior family members should continually monitor younger members to see when they are ready to branch out and take on major responsibilities. As young family members within the company become mature adults, they may be the perfect vehicle for opening new territories or heading up new product lines.

The worst mistake a patriarch or matriarch of the family business can make is ruling with complete autonomy. Even though a certain family member may have founded the company and in the process learned an enormous amount about the industry, it's vital for the long-term survival of the company that younger members are allowed to make decisions and eventually be given full responsibility in certain key areas of operation.

When jealousy or arguments develop between family members, they should be addressed quickly. Don't let unspoken feelings of hostility simmer.

As children of the founding members have their own families, the business may not be financially able to support everyone. Equitable distribution of work must be undertaken. This requires great care on the part of senior members who decide which family members will enter the business.

Family-run businesses often have non-family employees. These individuals, who may be vital to the success of the company, should not be treated as outsiders. To do so endangers the company's growth.

Senior members should prepare for their own eventual exit from the company. Consult with attorneys experienced in estate planning and business succession. The eventual successors should be determined by the time senior members are in their early sixties. Don't leave the company in turmoil as the result of the sudden death of a senior member, without adequate succession plans in place.

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