My wife, my children and I own a business together. My wife and I started the business, and we’re delighted our children chose to join us. Unfortunately we don’t always see eye to eye about things. Any suggestions you have for managing a family owned business would be appreciated.
Family owned businesses are the predominant business form in the United States, in terms of numbers of businesses operating. The running of a family owned business can sometimes seem non-stop. From the time you get up, conversations at breakfast, the hours you spend at work, discussion over the dinner table, and even pillow talk at night, for many families the business never seems far away.
Keep things on track by being clear about where the business is going, how it is governed, who has decision making authority over which decisions. Keep the peace by respecting differences in decision making and actions, while monitoring what gets done and identifying where to pitch in to help. Recognize that businesses and people need to make mistakes to learn and grow – encourage risk taking within boundaries. Finally, remember, very little goes wrong that can’t be corrected – have patience and care for your business partners / family members.
If your family owned business is like most other businesses, you may talk about where you’re going, but there’s very little in writing. A clearly written set of short and long term goals can keep everyone headed in the same direction. An action plan, with specific next steps, dates and assignments can make it clear who will be doing what. Regular meetings to review progress can clarify what’s done, what’s next, and who might need help.
Use governing principles to guide the business:
- set short and long term goals for all areas of the business
- build specific action steps lists, so everyone is aware of what’s expected
- meet weekly to review and update plans and action steps
- set a growth rate of 15% year over year – and then hit it every year
- focus on growing profits faster than revenue
- maintain reserve funds worth 3+ months of expenses
- build a forecast and a budget – and then use them to run the company
- be able to sell half again as much as is needed each year
- sell old products to new customers and new products to old customers
- develop a multi-pronged marketing plan, measure payoff regularly
- define the organization chart, responsibilities and pay structure
- regularly review individual performance, in writing
- ask each person to build and implement an individual education plan
- define the exit strategy for the senior generation
By now, you may be thinking, this list sounds just like a list of governing principles for any business, not just family owned. That’s the point. Run it like any business, and the company will likely prosper.
One skill to practice, especially in a family owned business, is learning to keep your mouth shut and wait until your input is requested. It’s so tempting to interrupt when you see a need for advice. But if it’s not your area of responsibility, butting in may be seen as just that – un-asked for assistance that’s not welcome.
Parents especially have a desire to help their children by protecting them. Unfortunately in the world of business, like life, it’s often the rule: that which doesn’t kill you makes you stronger. Encourage people to build strength and skill by making mistakes and learning to recover.
Before you try to step in, ask yourself this: is what’s going on likely to permanently jeopardize the business in a major way. If the answer is, “No” or “Not likely”, then let things play out. If the answer is, “Yes”, or “Very possibly”, then call a meeting to discuss your concerns. If there’s serious disagreement, ask the group to participate in decisions about how far to go, and where to draw the line. And be prepared to respect the wishes of the group.
Looking for a good book? Family Business by Ernesto J. Pozza.
Andi Gray is president of Strategy Leaders Inc., www.StrategyLeaders.com, a business consulting firm that specializes in helping entrepreneurial firms grow. She can be reached by phone at 877-238-3535. Do you have a question for Andi? Please send it to her, via e-mail at AskAndi@StrategyLeaders.com or by mail to Andi Gray, Strategy Leaders Inc., 5 Crossways, Chappaqua, NY 10514.