According to the Small Business Administration (SBA), family-owned businesses account for between 80 and 90 percent of all large and small businesses in the country. Even so, barely one-third of them carry over into the next generation, often due to discord and lack of planning.
How to Keep Family-Owned Businesses Thriving
Many experienced business consultants, and also Atlanta business lawyers like Nancy Ghertner, have suggestions for keeping a family business alive and thriving well into the second and third generations. The main recommendation that is found consistently is to treat the business like a business, not like an extension of the family. Some specific recommendations include:
- Have a written business plan: The business must have a written business plan with goals articulated and a mission defined so that all members are in agreement about the purpose of the business. The plan should include details of how the business will be passed on to the next generation.
- Define the roles: The role of each family member participating in the business should have his or her duties specifically articulated. The compensation should be in writing as well as how the ownership shares will be divided. Anything that would be written for non-family member employees should also be written for family members.
- Establish a chain of command: The decision-making hierarchy needs to be clear. Employees often resent being told what to do by a family member the employee does not report to. Also, family members need to be aware of who in the hierarchy they report to so that one family member does not overstep his or her authority by “bossing around” the others.
- Set boundaries: When family members mix their personal lives with their work lives, it is too easy for them to continuously “talk shop” or bring their personal problems from home to work with them. As much as possible, there should be boundaries set. Shop talk should be reserved for the workplace, and family problems worked out at home.
- Treat all workers fairly: It is easy to either favor family members over non-family members, or to go overboard trying to avoid favoritism to a degree that family members are not treated fairly. The same work standards and required qualifications should apply to all employees whether they are family members or not.
- Treat all employees equally: All employees should have the same pay scale, work schedules, and opportunities for advancement. Avoid giving a family member a “sympathy” job based only on the fact that the person is a family member. Employment should not be based on the family relationship, but rather because the family member has the qualifications necessary to do the job.
Communicate, communicate, communicate: One consistent piece of advice is to maintain communication. This is true in any business, but family business relationships take on a dynamic that makes clear communication even more important. Regularly-scheduled weekly meetings are an excellent feature to establish where all employees, including family members, feel free to express their concerns, so disagreements can be solved before they fester out of control.
Call Family-Owned Business Lawyer in Atlanta Nancy N. Ghertner Today
Attorney Ghertner has almost 30 years of experience working with family members who are in business together. She can help you craft shareholder agreements, articles of incorporation and contracts, and employee agreements.