In today’s modern world, and with the uncertainty that the COVID-19 pandemic has brought upon our nation, Americans are becoming more resilient and creative in how they build their futures. In the U.S. alone, 89% of all businesses are small businesses with less than 20 employees. In addition to that, one in five is a family-owned business. (Small Business Administration, 2019).
Owning a small business and managing one as a family can pose great risks, both personally and professionally. Data shows that 70% of small, family-owned businesses fail or are sold before the second generation can take the reins. Between the struggles of building a business and maintaining personal and professional boundaries, operating a successful family business takes hard work, a solid and detailed business plan, and great communication skills.
If you are considering starting a family business, or perhaps you are knee-deep in one as you read this article, here are a few pieces of advice to remember as you plan for your growth:
Develop a solid business plan and structured leadership roles.
You might have a great idea in place and the business may be chugging along at a rate that is manageable to you at the moment. However, what do you do if business explodes? Conversely, what do you do if it plummets?
A solid business plan that the entire family agrees upon is your first step in ensuring longevity. Develop a road map of possibilities and identify what happens in each of those cases. Do you hire outside of the family? What can you outsource? Does the family agree on utilizing professional connections? Having answers for these questions and more will help when questions and crises arise.
In addition, it is important to define each person’s role within the business and what their responsibilities are. Maintaining professional roles will nix finger-pointing and allow an even transition to leaving personal feelings at bay.
Maintain strong and open lines of communication.
Once you have your business plan in place, be sure to stay connected. It can be easy to get bogged down by the day-to-day mundane tasks of running a family business, so you should remember to keep logs, journals, or weekly activity emails so everyone within the company stays up-to-date and on the same page.
When issues arise, schedule time to meet immediately and discuss the problem and every possible solution. Within your business plan, you should identify a way to make final decisions—is it all-or-nothing, or majority rules?
Any successful entrepreneur will tell you that humility is a key characteristic in building a successful following and a successful business. Stay open, humble, and always fight for what you think is right.
Plan for the future.
Most importantly, when building a family business, you want to be sure that the legacy you are building is passed down for generations. Keep the younger generation involved. Allow them to take part in the bigger meetings and planning sessions. Allow them to understand the decisions you are making. Getting involved early on will help the younger generation feel a sense of loyalty to the business. Making sure they feel like their voice matters will make them feel proud to be part of such a legacy.
Develop a conversation about what it means to take over the family business, but allow those that are to follow to have their own dreams as well. If they decide that the family business is not for them, rewrite the plan and create a way for the business to continue in a way that suits the entire family.