Family owned and operated businesses are a large part of America’s small business history. According to The Conway Center for Family Business, family-run businesses make up 80% of all businesses in North America1. That’s why it was no surprise that our article on Do’s and Don’ts for Husband and Wife Teams was one of our most shared articles.
However, “family-owned” often extends beyond spouses, and can include children, cousins or other extended family members.
Listed below are some helpful do’s and don’ts for family businesses to keep family and professional ties strong.
Do: Continue to rely on traditional business hierarchies
Just because you’re running a business with your family doesn’t mean you can do away with the traditional chain-of-command. It’s still important to set job titles and hierarchy, as you would if managing a non-family business.
Don’t: Give family members a free pass
Your family members still need to be held accountable for their roles. If your second cousin wants to work in the family business, but lacks the necessary skill set or personality traits, you need to think about the long term problems it could cause – both in the business, and in your personal life.
Bottom line: don’t give your family members any free passes that you wouldn’t give a close friend or colleague.
Do: Plan for the future
When you run a family business, you don’t think week-by-week – you need to think generation-to-generation. So talk early and often with the younger members of your family and your staff about what positions they’re interested in and where they want to take the company in the coming years.
Don’t: Just use handshakes
If you are in business with a family member, chances are you already trust them more than a typical colleague. That being said, any paperwork or documentation you would get with non-family members, you need to get with family members. That could include non-disclosure agreements, stock and equity grants, etc.