Will Your Family-Owned Business Survive?

For many individuals, the family farm is the only working life they've ever known. Their parents operated the farm, and when the time came, the reins were passed on to the next generation. Many family farms, dairies, and livestock production businesses are in this type of situation.
Family businesses are unique in that they bear some nepotism. In many families, there is a hierarchy. Though one individual may be better equipped to handle a situation, age, or favoritism may win out. Another contributing factor may be that siblings or relatives are on staff out of a feeling of obligation - not because they do their jobs well. Oftentimes, common business sense takes a backseat to "wanting to do the right thing" for the family. What may have worked early on in the business may not work as successors vie to take over the company.
Family Business Planning
One of the best ways to ensure the success of a family business is to treat it just like any other company - putting business matters ahead of personal politics. Open dialogue and planning are tools to follow.
Here are some tips:
* Understand the intentions of all employees. Foster open discussions about who plans on sticking with the business long-term and who really isn't interested in becoming a successor. Don't force children or relatives to take leadership roles if their interests lie elsewhere. You'll only be heading for trouble in the long run.
* Create a written strategic family plan. Put goals of business members into writing, and establish policies for the family's role in the business. The plan should spell out a mission statement, hiring and exiting procedure, and compensation. Make sure all involved know the plan. It could head off future squabbles over control, salaries, and sibling rivalry.
* Enforce company code. It is often easy to be lenient with employees who are family members. However, stay firm about views on business etiquette and no-tolerance issues. Set rules for addressing stealing, tardiness, or other issues among employees. Also create solid written policies about loans to family members and the flow of money in the company. Everyone involved should be aware of and agree with these policies.
* Think about a succession plan. Outline how succession will occur and indicators on when that time is right. Include preparatory measures that factor in training for those who will be leading the succession. If a plan is intact, heirs may maintain a more positive outlook and be interested in continuing the family business.
These are only a few guidelines to help make your new or existing family business a success. Modify or add to them based on the unique needs of your company.
Family-owned businesses have their own unique share of problems, which should be addressed early on.