Family businesses are an essential part of the United States economy. According to the SBA, family and small businesses comprise around 44% of the United States GDP. Moreover, some of the biggest companies in the country are managed by families. For example, there’s Walmart, which the Walton Family heads, and Ford, which the Ford family manages. Yet, despite their importance, family businesses can be problematic. In this article, we’ll discuss five ways to mitigate these problems.
Communication is key
The first way to mitigate family business issues is communication. In any family, communication is key to resolving conflicts and understanding each other better. In a family business, this is even more important, as a lot of money is at stake. Therefore, communication should include clear lines of authority and delegation of responsibilities. It’s also essential to have regular meetings where everyone can share updates and discuss any issues. Here are some common ways to improve communication in any business that you should apply to yours:
- Encourage everyone to share their thoughts and feelings openly.
- Make sure everyone has a chance to speak.
- Establish clear lines of communication.
- Use communication tools like email, text messages, and chat software.
- Keep communication channels open even after conflicts have been resolved.
Communication is the pillar of any good relationship, including the relationships within a family business. Follow the tips above, and you should avoid most family business problems.
Have clear rules and procedures
To avoid conflict, it’s essential to have clear rules and procedures in place for the business. These should be agreed upon by all family members and should be followed consistently. It will help ensure that everyone is treated equally and fairly. It will also help prevent anyone from taking advantage of their position in the company.
The most important rule you should have is a clear code of conduct. It should spell out what is expected of family members while working in the business. It should also include consequences for breaking the rules. Add any other rules but don’t forget a clear code of conduct for your family business.
Resolve conflicts quickly
Conflicts are bound to happen in any family business, but resolving them quickly and fairly is essential. This means listening to both sides of the story and taking actions based on objective evidence rather than personal feelings. If your family can’t resolve a conflict internally, bringing in a third party to mediate may be necessary.
One of the most common conflicts that require mediation is divorce. These can be costly if not handled correctly and if the couple decides to go to court. An experienced divorce mediator can handle this kind of conflict quickly and cheaply. It can undoubtedly deduct more from the thousands of dollars spent in court while reducing the entire conflict in under a few days.
Don’t let emotions get in the way.
It’s easy for emotions to get in the way of business decisions in a family business, but it’s essential to try to stay objective. This means making decisions based on what’s best for the company, not what’s best for individual family members. It can also help to have separate accounts for personal and business expenses, so there’s less temptation to mix the two.
Dealing with emotions can be problematic. Here are some standard options:
Talk it Out
Conflict can happen at any time, and emotions can get heated. However, talking it out can help to resolve the issue. When talking it out, you should try to remain calm and listen to what the other person has to say. Feel free to express your thoughts and feelings clearly but don’t interrupt the other person. By doing these things, you can talk about your differences properly.
If you don’t think that talking it out will work, you may want to consider therapy. A therapist can help you to understand your emotions and learn how to deal with them. It can be an excellent way to resolve personal issues affecting your business.
Plan for succession early on
One of the biggest potential problems for a family business is succession planning. No one knows what will happen when the founder inevitably retires or dies, so it’s essential to plan for succession early on. This means establishing clear guidelines for who will take over when the founder leaves or dies and training them accordingly. If succession isn’t planned for early on, it can lead to conflict within the family over who should run the company.
Follow the tips above, and you should avoid most family business problems. These will ensure that your family business can continue to thrive for many years.