Some people may have opted to start building their own family business, mainly if it is easiest to operate a business with family members. Having your own business may just be the ultimate solution to creating your interests into something valuable and profitable. But is it?
Today, the very successful businesses in the Philippines have been run by families for many generations. Although they have made it through these years, for sure, they have been through various struggles which have affected their relationships with one another.
The most essential thing that should be considered in any kind of business is a business plan. Without it, you will just be wasting all your time, money, and efforts. You must have the right mindset of being an entrepreneur – equipped with the right attitude in handling the business and becoming more creative should a particular plan fail.
Having family members running the business may somehow put you at ease since you know they are family. They would value the same interests as you have and would protect the company. But think again. Be sure to carefully choose the right family you want to take on board.
Working with family members may be a joy (at least at the start of the business). The excitement builds up as the company starts. But eventually, when tough times come, family members may begin to bicker with one another. They may take their “business discussion” to a more personal level which eventually can affect their relationship.
While non-family firms may be thinking about their goals for the next quarter, a family-owned business thinks about years or even decades ahead. Family members are willing to take various hats and take tasks outside their formal jobs to ensure the business’s success. Additionally, family members are eager to contribute their finances to support the industry to ensure its long-term success.
Choosing the right family member to work in the family-owned business is crucial. Everyone should share fundamental values. Any non-compliant family member is enough to tarnish the image of the shared values.
Be careful to who you entrust your finances/financial information. Sometimes, the last person you expect is likely to become a traitor.
Succession planning is essential. The existing president may not be willing to step down, thinking that he is still capable even if he is already 80 years old. Although he may believe that he can still work in the company, choosing the next person who would take his place should already be exposed to the business.
Before you and your family start with a business, be aware of the possible outcomes – both positive and negative. Here are some of the DOs and DON’Ts of running a family business.
DO’s
- Always rely on traditional hierarchies. Decisions should be based on the job titles set for each family member.
- Family members may want to invest in the business but would not want to be in any part of it. Always put everything into writing, whatever you and your other family member have agreed upon.
- Make use of a family council to address specific family issues. The family council usually comprises members who may be owners but are not company employees.
- Carefully think about succession. The success rate of a business passed on to the next generation is quite slim. This is because of the failure of the succeeding age to have more knowledge about the company before taking over. The family member you are eyeing to take over should have exposure at a young age.
- Put job responsibilities into writing. There may be certain family members who may not take the business seriously. And thinking that they can get away with their responsibilities anytime they please would undoubtedly hurt the company. Therefore, ensure that all the family members who wish to participate in the business are entirely dedicated.
- Always communicate. No matter what kind of business you are in, everyone should have open communication. This way, problems can be resolved and may be able to prevent unlikely circumstances by providing solutions that everyone agrees on.
DON’TS
- Don’t give family members a free pass. Treat each one as if they were other people working for the company. Everyone should be seen to be working accordingly and fairly. Your family members should also be held accountable for their roles. It is not enough that one would like to be part of the business. The skills needed for a particular position should be prioritized.
- Never confuse family decisions with business decisions. There are certain circumstances that family members would disagree with, but before you make it all personal, think of the best way to solve your problem with the business.
- Don’t bring family disputes into the business. Indeed, there would come a time when family disputes cannot be avoided. But letting the company be affected by the conflicts among family members will not make it any better.
- Don’t leave family members open to liability. Each family member is protected from personal liability should the business go south. The business should either be incorporated or set up as a limited liability company.
- Do not just rely on the word or from a firm handshake. There is a need to have proper documentation for every agreement.
Having a family business is indeed a significant challenge. Like any kind of business, you need to have the mindset to genuinely endure all the ups and downs that may come your way.
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You may contact Armando “Butz” Bartolome for questions and more information.
By email: aob@gmb.ph
FB Page: Armando Bartolome
Linkedin: https://www.linkedin.com/in/franguru/
Website: https://www.gmb.ph
