People in your family.
You love 'em, you hate 'em, you can't believe they're related to you.
And you also run a business with them.
Owning a family business presents a unique set of internal challenges— the organizational structure can be too closely-knit, differing opinions (plus a familial comfort) can cause arguments, and employees outside the clan can feel excluded.
If you've ever watched Duck Dynasty, you know that spending too much time in close quarters with your family creates friction.
But there are advantages to a family business, too. There's a strong level of understanding and team members know each other’s strengths and weaknesses. This knowledge can make the business stronger.
Working together is only one part of the equation. Family businesses also have to navigate how they work with clients, customers, and contractors who are outside of the family circle.
So how does a family business go about setting boundaries? Should you create policies? Should you have a chain of command, even if it means your little sister is bossing you around?
Here's how to minimize friction and increase productivity (and profit):
1. Establish a Clear Chain of Command
Sometimes clients begin communicating with any team member thinking the same power of decision-making is held by all members of the family. If they talk to Lucy, surely the same message will get to Brandon, and vice versa.
When this happens, bottle necking can occur because there is no formal chain of command or clear boundaries within the structure of the family business. Messages get muddled before making it to the correct point of contact, and processes slow down.
Anthony Leardi is Director of Marketing for Wexco Industries—and he’s also the son of the company’s co-owner.
Because Wexco has a clear chain of command (with Anthony's dad as the final stop), family members who work within the company don’t get extra pull. This keeps decisions objective and communications efficient.
2. Always Retain Professionalism
Some people might think you're only successful because of your business' history. They know your mom is a great business-woman, but they're not so sure about you. Because of this, you need to work extra hard to always be professional.
If you're working out of your home, make sure there's a quiet place to accept phone calls. No baby-crying and dog-barking!
If clients visit where you live, make sure things are tidy, professional, and well-designed.
Never argue with a family member in front of a client, customer, or employee.
Don't rest on your laurels. Every time you meet with a customer or client, you must act like they've never worked with your business before. Try to make a good impression no matter the circumstances.
Recognize your strengths. Do clients seem happier when they talk to your sister on the phone instead of you? That's ok! Optimize and get her on phone duty more often.
3. Outline Expectations
Any project manager will tell you that outlining the goals and expectations for your task is vital to a successful project outcome.
Before starting any client work, a contract outlining goals, budget, timeframe, and tasks should be created and signed by both the family business and the client.
Say your family business creates websites. Before starting the work, drafting a requirements document would be one way for both parties to understand the scope of the project. The document would outline the needs and timeline for the project, and then the business would generate a realistic quote and contract. Both parties would sign off on the agreement for the project’s parameters, and this would serve as a definitive reference point as the process moves forward.
Read more: Small Business Administration offers tips for creating a contract.
4. Enforce Payment Policies
If a client argues over an invoice or is late paying their bill, there needs to be procedures in place to protect the family business and ensure work doesn’t go unpaid. Implementing a late fee for overdue invoices, giving discounts for upfront payment, and withholding the finished product until payment is received are all ways that can help manage these sticky situations.
Denny and Melissa Cave own Cave Interactive, a digital media company.
With partial payment happening up front, the family business is somewhat protected from the missed/late payment situation.
4. Know Your Limits
As a family business, you have the power to decide what workload and deadlines you’re comfortable taking on. Sometimes that will mean saying “no” to jobs that aren’t a good fit or are outside your comfort zone. But sometimes, it means being flexible for clients in a way traditional businesses can’t.
Bridget Ingebrigsten owned her copywriting business Write on Command for fifteen years. In order to work from home and help take care of her kids, she made sacrifices to maintain her work/life balance.
Knowing your limits means you can be as flexible or inflexible as you need to be to get the job done and still enjoy your free time after-hours.
5. Be Consistent
One of the advantages to a family business is level of understanding shared between business partners. It’s easy to become a well-oiled machine when you can spare the normal workplace niceties and just get down to business. When it comes keeping that process streamlined, the consistency will increase efficiency and ensure uniformity.
Leo’s Pizza is a family-owned and operated business in central Illinois. They are known for their quick service, which is a product of all family members having their own tasks in the kitchen—they’ve got it down to a science. There’s no new process being introduced each night; they just follow the recipe and keep consistently making delicious pizza.
Don’t get caught up in creating new processes—keep things running smoothly and stick with what works.
Set Boundaries, Baby!
Family business or not, setting boundaries and knowing when to draw the line is one of the decisions you have the pleasure of making as a business owner. You’re calling the shots—so find ways to make your work more efficient and enjoyable!
Your Turn: What have you done to effectively manage your family business? What are the biggest challenges?