To manage a family business, there must be a clear definition of the objectives that the company intends to achieve and face it as a large company. Put yourself in the position of partner/collaborator with the mission of ensuring the company’s growth with people committed to the same ideal. Most new companies start with an informal management style, with the absence of internal policies and management standards, in addition to being formed largely by partnerships between brother, father, mother, uncles, cousins, etc.
Choosing closest family members is an advantageous option in managing family own business, due to the very strong bond of trust, but on the other hand, there is the difficulty of a clear definition of hierarchy.
Here are some tips to make family businesses successful and learn how to avoid making mistakes when running a family business:
- Have a consistent membership formation
To open a company in partnership, whether with family members or not, it is necessary to make the social contract. The document specifies who owns the company, as well as the rules and conditions under which it will be incorporated. In the case of companies with people of the same family, having a consistent formation of partners is equally important, as well as the obligation to document it. Often, other members of the same family, for example, will also be part of the company, even if not as partners and, in the future, their participation can cause confusion. Therefore, the formal definition of the corporate structure of the company is essential.
- Define roles and assignments
As well as the formalization of partners, a family business also needs to have defined and documented the positions and attributions of each member who is part of the company. This step may seem unnecessary to many, but it will also make it easier to follow the growth of each member.
- Separate business money from personal money
Small businesses need greater attention in separating the company’s money from the entrepreneur’s personal money. The same is true in family companies. It is necessary to maintain strict financial control so that the individual debts of each partner or collaborator member of the company do not mix with the profits, costs and expenses of the business.
- Make rules for everyone and avoid family privileges
Equal treatment is needed in a company with family employees and people who are not of the same family. By privileging relatives in moments like delays or absences, for example, you can demotivate and even provoke negative examples for those who don’t have any privileges.
Establishing clear rules of behavior in the company helps to create an environment of equal treatment among other employees, who do not belong to the family, and even avoid major disputes for power or money.
- Trace metas
One of the positive aspects of starting a family business is being able to share the same purpose: to make the business work. You’ve probably heard the expressions “feeling of ownership” and “wearing the company shirt”, right? These desires exist more naturally in members of the same family.
On the other hand, the lack of planning for the future, often existing in an environment without defined rules, can disrupt family composition. That’s why it’s important to leave informality aside in some administrative processes and define where the business wants to go, what the company’s goals are and set goals.
- Track results from all areas
All sectors of a company, such as sales, finance and commercial, must have their performance measured. Create ways to track the results of areas as well as individuals. These strategies will be important so that the goals defined, according to the previous tip, are achieved along with the company’s growth.
By monitoring the individual results, it is also possible to analyze whether any hiring was made only by the close relationships between family members. All members of the business need to work towards strengthening and growing the company and not just trying to secure a job just because they are family.
- Plan the succession of company management
Of course, at the time of opening a family business, the succession of the management of the company is far from a priority decision. But, as the company and its partners and employees mature, it is important to define who will be able to take care of the business in the future.
That’s because, the possibility of the company falling into the arms of someone who is not connected to it or to the market in which it operates can reverse all the effort and work dedicated by those who helped to start the business!
Planning the succession of company leaders can bring up many emotional issues and even generate family fights. Therefore, it is possible to have the presence of a professional who is outside the family to analyze the situation of heirs of the business and the positions that will be available.