Business

August 31, 2022

By Canada Business Ontario

Running a family business is like running any small business. However, there are certain issues that are specific to operating a family-owned business.

Some common problems that can occur in a family-owned business include:

1. FAMILY TENSION

Different opinions do not always produce disagreements, but the emotional relationships between family members can make it hard to make objective decisions.

2. MANAGING THE BUSINESS

If a member of the family is in charge of operations, he or she should be able to negotiate between family members to make the best decisions for the business.

Fairness is very important in a family-owned companies as management will be ineffective if special allowances are made.

3. SUCCESSION PLANNING

Succession planning is an important issue to consider for any small business. A strong succession plan can guide your business through a change in management and can help you avoid conflict.

4. HIRING RELATIVES

One of the most common issues in a family business is the pressure to hire a relatives. The emotional aspect of family relationships can make it difficult to refuse the request.

5. PRESENTING NEW IDEAS

When presenting new ideas for business improvement, particularly where spending is involved, base your information on facts to provide an objective perspective of what is best for the company. Family members can then make an informed decision based on concrete information.

6. SHARING PROFITS

Paying family members and sharing profits among them can be a difficult task.

If the business is a small corporation certain equalizing factors can be accomplished by using stock dividends or recapitalizing the company.

7. STAFF TURNOVER

Some family-owned companies have trouble with high turnover among their non-family employees. Once you know what factors are affecting turnover, you can take steps to address them.

Remember, running a successful family business requires that you treat the business like a business.

Read the full article here:

Managing a family owned business (infoentrepreneurs.org)