A popular American tradition is the family business. It gives spouses, parents, children and others a chance to share a dream that can continue to grow and prosper generation after generation.
Here in the Treasure Valley, there are many examples of successful family-owned businesses.
They include folks with whom I have done business: Norco, Global Travel, Western Equipment Sales, Sloan Security Systems and the J.R. Simplot Co., to name a few. To my knowledge, all have managed to establish harmonious and supportive relationships among the family members.
Without proper planning and management, family businesses can be a source of contention, acrimony and irreparable harm to once-loving relationships.
Thats why its important for aspiring entrepreneurs to fully understand the pros and cons of going into business with their children, other relatives and in-laws.
The needs of the business may not always be compatible with family harmony, resulting in a situation that, handled improperly, can jeopardize the survival of both the family relationships and the business.
When bringing family members into a business for the first time, especially if the family members are investors or are joining in a startup situation, I strongly urge the business owner to put the business relationship in writing.
Family members sometimes buy into the excitement of a business startup without a clear idea of their role once the business is under way.
The document can take the form of an expanded Operating Agreement that includes a succession plan. The agreement should be reviewed with all family members active in the company.
It is imperative the agreement be reviewed annually, with changes and revisions reflecting continued involvement of the family members with the business, including changes in roles and responsibilities.
While some experts advise against hiring family members, that sacrifices one of the great benefits of a family business.
Countless small companies would never have survived without dedicated family members.
In an ongoing family business, its important to treat family members fairly but avoid favoritism. Pay scales, promotions, work schedules, criticism and praise should be evenhanded between family and nonfamily employees.
In most companies, the nonfamily employees quickly learn if the family members are pulling their share of the load.
A written annual review of each members performance should be a key step to ensure expectations are clear and performance is viewed objectively.
Long-term, unaddressed performance shortfalls can easily lead to major surprises, resentment and anger that can seriously damage family relationships as well as the business.
Dont become the employer of last resort for every distant relation who calls. Base employment on the skills or knowledge someone can bring to the business.
Many astute business owners whose kids one day will be joining the business make them get initially at least three to five years of experience elsewhere to help them gain perspective about how the business world works outside of a family setting.
Problems and differences of opinion are common in a family business, so keep lines of communication clear. Weekly meetings to assess progress, air differences and resolve disputes work well for many family firms.
Just as solo entrepreneurs and nonrelated partners need to separate their business and personal lives, owners of family businesses need to prevent work-related issues from dominating family activities.
While it may be difficult to totally confine shop talk to the workplace, make it a standing rule not to discuss work and business issues at social gatherings or at designated family times, when the focus should be on subjects other than the business.
Idaho district director for SCORE, the Service Corps of Retired Executives. firstname.lastname@example.org