Family businesses comprise a large portion of the total businesses launched every year in America. Yet while blood is thicker than water, starting a business with a family member, relative, spouse, or children presents a unique set of challenges aside from the usual problems that a regular business already has to navigate across. These challenges are the culprit to why only one in every three family-owned and -operated businesses survive long enough to make money. To help you kickstart a family business with a solid foundation that can withstand these said challenges, here are seven tips:
A family business isn’t just about what you like as an individual. It’s also about what you enjoy doing as a family. You cannot expect your family members and relatives to work at maximum capacity if they aren’t as passionate about the business as you are. Determine what activities you and your family enjoy doing and consider making them the theme of your business.
If you’re an expert at, say, barbecuing, why not start your own restaurant? If your family has a combined experience of 20+ years in construction or farming, why not turn that field experience into a business? Sticking with what you love doing and what you know by heart both equates to a solid business foundation.
How much is your starting capital? Between you and your family members, how much can you pool in together for a shared business? Perhaps talk of money is where a family business starts to get delicate, to say the least. It can strike you as uncomfortable to ask how much your relatives can contribute. Nonetheless, it’s an important conversation that you’ll need to get used to if you will ever succeed as a family business.
Divide the workloads based on individual skill set. The competitive edge of family-owned businesses is that people inside it are aware of what they can and cannot do and thus are able to compensate for each other’s weaknesses. For instance, if your uncle or aunt is great at accounting, then he/she can manage the business’ cash flow. A relative who understands customers can be the director of sales and effective email marketing strategies.
Brick-and-mortar family businesses can dramatically expand brand visibility through a dedicated website. Having your own site is a competitive edge that you simply cannot overlook. Without one, your brand is left in the dark. Brand exposure is limited to local leads and customers. A site, on the other hand, can bring your products and services to the whole world, round the clock.
As your business grows, you’ll need to hire more employees to handle the increased workloads. Chances are, you’ll run out of interested family members and relatives who want to work with you on the business. As such, you’ll be hiring non-family employees. Make certain that non-family employees are treated equally as family members. Limit the inside jokes and avoid any favoritism or nepotism within the workplace.
If your business’ edge relies on a proprietary technology or a unique service, be sure to protect it from copycats. Apply for a patent, whether it’s a utility, design, or provisional application. These patents usually take a long time to get approved so it’s best to apply for it as soon as possible. In addition, decide what type of family business you’ll be starting. The major types include corporation, partnership, or LLC.
Every business entity, despite having different business models, products, services, and focus, have the same fundamental parts – a proven concept, business plan, marketing and branding strategy, workforce, and the business permits and licenses to operate. Ultimately, what makes a family business stand out from competition is how well you and your relatives work together, so kickstart a business with family members and relatives who you trust and have good chemistry with.
by: Lee Flynn