Running a small business is challenging, but it’s even harder when you add family dynamics to the mix. Just ask the producers of CNBC’s “The Profit” or the Food Network’s “Restaurant Impossible” how family drama can impact business. While it might make for entertaining TV, family drama does not have to run or ruin your family business.
The keys to success in any business—which are especially important in a family business—include communication, written policies and procedures, and ongoing education.
Communication matters
When you spend all day and every day with a family member, you might think you are regularly communicating. However, that kind of proximity can cause you to talk less and assume more. Family businesses often rely on informal rather than formal communication, which means goals, strategies, and plans are rarely recorded and even less likely to be accomplished. It gets even more complicated when you have employees who are not family members and are also involved in the business.
How do you make it work? Don’t talk business at the dinner table or at home. Do leave the work at work. This may be difficult to fathom, as the lines between home and business are blurry in nearly every small business dynamic. So schedule regular team meetings at your place of business with a written agenda. When you meet, review key philosophies, business direction, and budgets so that everyone is on the same page. End team meetings with to-do lists, assignments that include owners and due dates. Also, follow up on all assigned tasks, either with another meeting or scheduled check-in.
Policies for progress
Knowledge in any small business is usually spread by word of mouth. It’s a natural format for companies with just one or two people, but as your business grows you lose assurances that information is reaching all of your staff. Documented policies and procedures facilitate training, consistency, and ultimately, a positive customer experience.
Just consider the questions that come up in your business on any given day. For example:
- What are your policies on returns?
- What are the rules for managing customer lists?
- Who makes bank deposits?
- Do you offer product or service guarantees?
- Do you have employee discounts?
- How do you handle customer complaints?
- What are your expectations for keeping the break room clean?
- What are your vacation policies?
What can you do? Create a policy and procedures manual, taking input from everyone on your team. Consider structuring it as a frequently asked question guide that you review periodically. Solicit input from team members. Include systems operating procedures, accounting internal controls (who opens the bank statement and who writes checks), operating hours, vacation and sick policies. Include business policies on respect for employees and outside vendors, and reimbursable business expenses. Most importantly, document your perspective on how to treat customers. Writing it down provides an opportunity to define and develop your business policies as well as making sure your new employees are kept in the loop.
Educated growth
Parents of second-generation employees often forget how much they have learned from their own experience. Sometimes they assume their children have absorbed the same insights through osmosis. After all, haven’t they lived most of their lives in the shadow of their hard-working parent? While that might be true, your children probably haven’t had access to the information, experience, and tools as you. Even if they have access to the information, they may not know what to do with it, such as how to read a financial statement, analyze sales trends, or manage inventory levels.
How can you help? As a family business leader, you have to create the same training and education opportunities for your family staff that you would create for any other employee. Get them to attend industry training events and take an accounting or payroll class if they haven’t had formal training in the subject. Solicit your family employees for their ideas for training and development.
Having a family business has its advantages and by making a concerted effort to formalize your family interactions at work, you can foster a healthy work environment and improve your business results.
A guide to small business finance
In this guide we'll walk you through the financial statements every small business owner should understand and explain the accounting formulas you should know.
