Avoid These Common Family Business Pitfalls

There are great things about running a family business. In the best of times, you’re working with those who know you, care about you, and understand your strengths and weaknesses. It’s also a great feeling to think that you are building a legacy you can pass on to your children or other family members. However, there are plenty of pitfalls that can come along with running a family business as well. Old dynamics can play out in unhealthy ways, and when that happens at work, it can be costly in more than just emotional strain. The tips below can help you avoid some of those pitfalls.

Have Formal Procedures in Place

Some family businesses are run largely based on valuable information that key individuals have in their heads. This works fine until it doesn’t, if anything happens to those key individuals or when it’s time for succession planning. At best, this can mean reinventing the wheel, having to learn processes that could have been documented. At worst, it can mean being unaware of critical information necessary to keep the business running.

Depending on the industry you’re in, this might include important compliance information. A private company that manages or maintains a government fleet in the state of California must comply with the state smog check requirements. You can find out more about how telematics can make completing smog checks take less time, cutting costs and increasing uptime. Tools such as these can be combined with written documentation so that employees can easily step into one another’s roles when necessary.

Break Old Patterns

One of the tough things about being around family members is that you all tend to revert to the roles you grew up in even once you are adults. As you take steps to start your business, and beyond, it’s important to be aware of this so that you can make conscious efforts to avoid it. It might be tough to stop thinking of your brother as the lazy one and your sister as the one who’s always late, but people really do change in adulthood. If someone has a consistent issue that’s affecting the business, it needs to be addressed solely within that context and without dredging up old resentments.

Keep Non-Family Employees Motivated

Employees who aren’t part of the family can be made to feel like second-class citizens if you aren’t careful. They can wonder if they are in a dead end job and that they are likely to be ignored for promotion and are held to higher standards than family members. It’s important to keep standards the same for everyone. The trick is that this can in turn cause family friction if your brother-in-law assumes that he doesn’t have to turn up on time or put in a full day’s work. You’ll need to be explicit about expectations and try to separate the personal from business. If your company really does intend to only promote people who are related, you need to be transparent about that fact.