How to Avoid Trouble When Managing A Family-Owned Business
There are many benefits to running a family business. You and your family derive pride, fellowship, loyalty, continuity and shared success through the business. It also means everyone’s financial stability and success rest with this primary source of income. Because of the shared financial risk, managing a family-owned business presents unique challenges. When close relatives work together, emotions can often cloud business decisions. To help manage the business, prepare a written plan. A plan can guide operations and create an objective standard for everyone to measure performance and results.
When you invest your own money and operate your own business, you have accepted the independence that comes with being your own boss. And as the manager, you are rightly concerned with the economic realities of running a business. However, if other family member’s have also invested in the business, they may rightly feel that they should have a strong say in the business operations. Family considerations and disagreements can get in the way of what should be purely fact-based decisions. Plan for professional procedures to help navigate disputes, so the business can operate effectively.
One solution may be to hire a general manager or chief operating officer, who is not a member of the family. This works only if all members of the family agree and discipline themselves to abide by the decisions and recommendations made by this executive.
Consider outside advice in developing a management plan to bridge family differences. A volunteer business counselor can offer insights, procedures and assistance in preparing a conflict resolution plan or a succession plan to bring an outside executive to the table as a manager and facilitator.
The SCORE Association was formed in 1964 as a nonprofit association dedicated to entrepreneur education and the formation, growth and success of small business nationwide. For information about starting or operating a small business call 912-652-4335 or visit us at www.scoresav.org.