There’s a certain kind of pride and gratification in running a family business that no other kind of entrepreneurship can offer. Like any type of enterprise, its success comes with hard work, but there are a number of factors specific to family businesses that are important to bear in mind.
Communication & Boundaries
The cornerstone of any business is communication, but this plays an especially significant role in the healthy function of a family enterprise. It can be easy to assume that because you’re close as family members, you have unspoken understandings about the nuances of running your business. This isn’t a safe assumption, so it’s crucial to be as clear and structured about communication as you would in any other professional context. It’s also wise to set boundaries between how your family members operate with one another in the arena of your company versus at home, keeping these as distinct from one another as you can.
Roles & Agreements
When family members work with one another, there can sometimes be a risk that roles will blur into one another and become a bit more tricky to define. This can stem from the same sense of informality that can lead to murky communication habits. Avoid this by making each person’s roles, responsibilities, and level of authority as clear as possible. Professionalism is key. Similarly, many people may find it easy to trust family members based on informal or verbal agreements. Despite this, your company is like any other. Everything must be formalized on paper to ensure structured decision-making and minimize risk of disagreements and litigation.
Adaptability & Succession Planning
Every business benefits from adaptability. As an entrepreneur, it’s in your best interests to be at the cutting edge of your industry and maintain a forward-thinking state of mind. While the more senior family members certainly have many things to teach the generation that will be taking their place, it’s also important to remain open to their input when it comes to the demands of a modern business. At the same time, the owner of a family business must be prepared for the process of succession. Everything that makes your business strong must contribute to a smooth transition of ownership and management, so the sooner you start planning, the better.
The majority of family businesses fail to succeed to the next generation, but yours doesn’t have to be one of them. If you want it to thrive for generations to come, you’ll need a carefully structured succession plan. Call Calgary’s finest team of CPAs at (403) 768-4377 to get started.