5 Rules for Mixing Business with Family
Studies have shown approximately 35 percent of Fortune 500 companies are family-controlled. In addition, a Bloomberg Business Week report found family businesses account for half of the U.S. gross domestic product, generate 60 percent of the country's employment, and account for more than three-quarters of all new job creation.
While family ties can bind business success, business consultant Lori Keegan says the old adage about mixing the two should serve as a warning of potentially treacherous waters ahead. Keegan's company, Transition by Design, specializes in resolving situational and relationship dilemmas impacting productivity, profitability or overall well-being of organizations.
"An ounce of prevention costs far less than a pound of cure," Keegan said. "These family business decisions—even "small" ones—can have tremendous ramifications."
Deciding to go into business with family members brings unique considerations. Despite that, Keegan says, when entered into with eyes open, it also brings intangibles that can put you ahead of the game. The biggest invisible dynamic that families miss is that relationships MUST change to succeed.
"Relationships with high emotional intelligence and good business sense will save the day for you most every day," she said.
To that end, she offers these "5 Rules for Mixing Business with Family."
1. Separate family decisions from business decisions.
This is especially important in the early stages of the endeavor to "assess if what you have in mind could work and HOW it could work if it's a justifiable idea."
2. Make sure family members are qualified for their professional roles.
Is their help really needed in that official and/or legal role? And is this person really qualified for the job? If not, is the business prepared to train unqualified candidates? The practices adopted should apply to family and non-family members alike, or you risk breeding resentment from other employees.
3. Clearly define if family members are ownership partners and/or participating employees.
If not implemented correctly or with the correct people, the situation could get messy and harm not only the business, but the family as well.
4. Consider the invisible people in the room.
Doing business with family inevitably will mean dealing with spouses, in-laws and children, and some of them might be obstacles to achieving your objectives. In laying the ground rules, consider precedents set for family members you absolutely need to say "NO!" to as employees, but in a fair, reasonable manner.
5. Continue to ask the tough questions.
Continuing to ask the RIGHT (tough) questions will guide you to the wisest course of action and/or modifications. Do not prematurely seek answers until you have sought the right questions. The appropriately matched answers will come shortly thereafter. Remember to seek guidance outside the family circle. A business strategist and business attorney should both be key weapons in your dilemma resolution arsenal.
Lori Keegan is president and CEO of Transition By Design Inc. She specializes in helping keep BOTH the business AND the family/marriage intact and happy. Learn about the company at www.TransitionByDesign.com.