It’s a common enough piece of advice: Don’t go into business with friends or family. There’s a good reason for this, it can very easily get complicated, messy and can affect your relationships outside of working hours.
However, that’s not to say that family businesses can’t work. Many businesses are started with family and go on to be successful, not just despite working with family but because of working with family.
The benefits to setting up a family business
One of the key benefits is trust. Many find it’s easier to trust family and friends to go into business with them because they’ve know each other for a long time.
Family businesses often have a greater sense of loyalty because they’re not just working towards business success, they’re helping family too.
Family business success
According to the Institute for Family Business, two thirds of UK businesses are family owned. That’s 4.8 million in total, with 16,000 of them being medium to large businesses.
In 2016, these businesses paid £149 billion in tax. They also employ around 12.2 million people in the UK so contribute to job creation as well as over a quarter of UK GDP.
They must be doing something right, but it’s still no easy feat. Here are some tips on how to ensure your family business can succeed:
Communication is number one
Good communication is central to any business. Sometimes when working with family people underestimate the need to have formal conversations and meetings.
Nobody wants to be formal with family but it’s important that discussions are encouraged, noted down if necessary and that everyone feels listened to.
Try to schedule in a weekly meeting where everyone gets a chance to have their say and draw attention to difficulties others may not be aware of so you can collectively work on them.
Set boundaries and roles
One of the problems with working with family is that it’s hard to shut off at the end of the day. Business and personal lives can become easily mixed up without clear boundaries.
Try to avoid talking about business outside of the office. Nothing dampens a family dinner more than bringing up business worries.
One of the benefits to hiring family members is that you’re likely to hold similar visions for the company. That being said, make sure these values are clearly set out so no one forgets what they’re all working toward and how their individual roles can contribute to this.
Make sure there’s no bias
When hiring people who are not family, be careful that these people feel equally listened to and supported. You don’t want them to feel left out, like their voices aren’t as important because they’re not family.
Giving jobs to family members over people more qualified or experienced in the relevant work can breed resentment with other staff members. It can also hinder your progress if you’ve got your niece doing accounts despite having no experience.
Get it in writing
No one likes to ask their family to write contracts or sign policies. However, it’s important that you keep paperwork and get agreements in writing. This can then be brought out if someone decides to contest ideas or new directions.
Another uncomfortable conversation may be succession plans. Don’t assume someone else will take the reins if the owner becomes ill, leaves or dies. Get it in writing and set up agreements in the event of this. It’s always best talking to a lawyer to get these affairs in order.
Help out the younger ones
Many businesses help their children get a taste of entrepreneurship by getting them to help out in the family business. This can help them to develop skills, build experience and also will help them to decide what they want to do in the future, whether they stick with the business or not.
However, don’t expect them to complete a full day’s work, 5 days a week unless you’re willing to pay them.
Listen to the younger generation
With family businesses that cross over a couple of generations the eldest tend to get more of a say in the day to day running. They have more experience and probably built the business from nothing.
However, one of the reasons why family businesses fail is because the eldest family members don’t listen to the youngest.
A good example of this is if a younger family member tries to encourage a digital approach to the marketing including getting a website or being on social media.
Those who have been running the business for 40 years may struggle to understand the importance of digital marketing and be set in their ways. This can end up setting the business back so much that it fails to compete in the modern market. This is where business meetings can help. Ensure everyone is being listened to so you can collectively decide what’s best for the future of the business.
Do you have a family business? How do you make it work? Please share any thoughts or comments below.
Want to learn more?
Subscribe to our newsletter to get accounting tips like this right to your inbox
About The Author
An experienced business and finance writer, sometimes moonlighting as a fiction writer and blogger.