Ensure Family business success with these five tips

This post is by Giles Ellis, an experienced business coach and Director at GECA Chartered Accountants.

New Zealand is a nation of small business owners – they are, quite literally, the reason why we have a ‘rock star’ economy.

But what’s far less publicised is that almost 50% of Kiwi businesses are family-owned – whether that’s a company that has been passed down to the next generation, a business idea sparked within a couple, or siblings working together.

If you’re running a family business, you’ll know it comes with immense benefits – your team care about the success of the company as much as you do, you understand each other far better than most colleagues and care about each other’s feelings and personal growth. But these positives also come with challenges. When things in a family business are good, they’re really, really good, but when they’re bad, all that emotional connectivity can make things very bad, very quickly. This can have huge implications not just for your business, but for your personal relationships too.

We work with a lot of family-owned businesses, and have picked up some tips along the way – here are our top five.

1. Clearly define your roles

Your family may run smoothly with people picking up the slack here and there when needed, but running your business like that is a sure way to disaster. By defining your roles, you’ll be clear on who’s in charge of what decisions. This helps with accountability when things go wrong and avoids the ‘death by committee’ phenomenon, which can slow down decision making. You’ll also reduce the risk of conflict caused by family co-workers giving unwanted opinions and ‘helpful hints’.

Start by looking at your team’s experience and expertise – who would be best to serve in which roles? Since it’s your business, you also have the luxury of considering what each of you would like to do, too. If one has more customer service experience, but the other enjoys it more, often it’s better in the long run to invest in upskilling, so everyone loves what they’re doing.

2. Set aside time to talk

You’re talking all day, every day, but it’s important to set aside times for formal discussions too. These are moments when problems can be raised and resolved, a chance for the whole team to focus on their shared goals and set some action points.

You can do this within your group, but it’s often extremely useful to have a third party to help guide your conversations, especially if your difficult conversations tend to descend into bickering. This could be a mediation session, or working with a business coach. You may find these formal discussions emotionally draining at the time, but the ongoing effects will be better communication, a team that’s working in unison, and a family who still love one another!

3. Create a shareholders’ or operating agreement

If you’re running as a limited liability company, you should create an operating or shareholders’ agreement. Family businesses often run on good faith – you trust each other to do the right thing. But as time moves on, ‘the right thing’ can mean different things to different people.

A shareholders’ agreement puts in writing decisions, such as what percentage of the company each person owns, and each owner’s rights and responsibilities. It should also make provisions for ‘the worst’ – what happens if someone dies or if the personal relationship breaks down?

4. Take a family-first approach

You can make any number of businesses, but you will only ever have one family. If things break down, try to err on the side of protecting your family and your relationships over the health of the business.

This rule applies on a day-to-day level too. It’s so easy to let work bleed into family time, to discuss a project over a romantic dinner, or to spend a weekend ‘family day’ at the office doing your accounts. Set times for business, and enforce hard cut-off for after hours. This can be harder than it sounds – especially when you’re feeling excited about work. Try simple techniques, such as leaving your phone and other devices out of your living areas, and make notes for later rather than raising issues immediately.

5. Work with family business specialists

You’ll know first-hand that family businesses are their own special breed. Introducing businesses into the family and the emotions that come with doing so, can make things incredibly complex. There are also risks that come with having all your family’s financial eggs in one basket.

Working with coaches, accountants, lawyers and other advisors who specialise in family business will help you turn your situation into a strength. At GECA we’ve been working with family businesses for years. Our approach helps clients achieve their goals, while preserving family relationships. We also work to help overcome the challenges that can prevent a family business from reaching its full potential. To read more about how we work with family businesses, click here.

Building your family business

Done well, a family business comes with benefits that can help it far outrun its competition. The key is to have expectations, planning and operational systems that protect feelings and relationships. Work within that structure and watch your family business thrive.

 At GECA we specialise in helping owners of family businesses grow revenues, increase profits and improve cashflow. Contact us for a confidential, no obligation discussion of your requirements