5 Family Business Fundamentals

There are 5.5 million family businesses in the United States employing 98 million people. This is a significant part of our nation’s economy, with a distinct issue, especially for small businesses that are family-owned: the family dynamic.
For those tight-knit, small family-owned businesses, I have 5 fundamentals to ensure you have a solid foundation for your business to create consistent success.

#1. Family members should be treated the same as the rest of the employees.
Stop the special treatment. This is important not only for the family member (who is trying to gain respect on her own) but for the health of the business. Frequently, I see a business pass from one generation to another without the proper effort to establish the incoming leader (son or daughter) and the business transition is anything but seamless.

What if a family member breaks the rules? Can you fire your son and still love him? Yes! He gets no special breaks when he breaks the rules. Can your family handle such a decision? It must, if the business is to remain successful.

#2. Family compensation should be equitable. 
Why do families feel they can pay a sibling less than anyone else they would hire into that position? In fairness to your son or daughter, pay them what their work is worth. Not only is this a proper recognition for the work being performed, but it also establishes their value to the other employees who know eventually that person will be the next boss.

#3. A family atmosphere isn’t just for family.
If you want to create a family atmosphere in your business, everyone employed gets to be treated with a family approach in understanding and compassion. Recently, we’ve been through hurricanes in this part of the country. Were you as concerned with the safety of your employees as much as you were for your family members? I can personally attest, when the “company” cares as much for the well-being of all the staff like family, the loyalty, dividends and goodwill created in both directions is significant.

#4. Communicate and collaborate.
If the patriarch is pulling rank, the business and the family are going to suffer. Leadership in a family business is a delicate dance between “running the business like you own it” and listening to the input from others inside and outside of the family.

When “Dad” is always the final say, very little input will be offered directly. This can cause issues behind the scenes, where a division can develop between family and everyone else. Collaborate with all managers and listen to their suggestions, regardless if they are family or not. A family-owned business can have the best of both worlds (family-owned and corporate) when open communication and collaboration occurs at every level of the organization.

#5. Family goals and business goals are two different things.
What is best for the family may not be what’s best for the business. When the family takes that trip to Hawaii the same year no one got a raise, the business goals and the family goals are competing. And your employees are watching.

If you want transparency, and in today’s world that is expected, then you must keep those goals clearly separated. If not, you will never get the loyalty of your employees if they always believe they are the second-class members of your workforce.