At Kehr Law, part of what we do as a firm includes providing counsel and guidance for small businesses and family owned businesses including those involved in manufacturing, media, contracting, retail, and a variety of other industries.  Given our experience, the following are some tips to help ensure the success of your family owned business:

 1)  Communication is key.  Not only is this important in any business, but in a family business it is absolutely crucial to ensure that the lines of communications are always open.  Taking the time to do this beforehand will help avoid potential issues in the long run.   Thus, before starting a family business, it is beneficial to discuss individual roles and responsibilities of each family member and to clearly define expectations to ensure that everyone is in agreement before proceeding.   Additionally, because problems and differences of opinion are inevitable, plan weekly meetings to assess progress, air any differences and resolve disputes.

 2) Formalize your business relationship (in writing).  Disagreements with business partners are extremely common, regardless of how strong your family ties lie.  Drawing up a written agreement for your business including expectations, dividing roles and responsibilities of each member, developing a succession plan, and other considerations is extremely important in any business.  Family businesses are no exception.  In fact, formal records are pivotal in a successful family business.  Although a written agreement may seem awkward to suggest to a family members because they could take it as distrust, a written agreement for a business partnership is simply good business and is designed to protect all involved parties.  Additionally, formalizing the business relationship in writing including things terms like compensation, ownership shares, duties and other matters can help avoid hard feelings or miscommunication in down the road.

 3) Business comes first.  Although family always comes first, when running a family business and to ensure the success of that business, business should always come first in the business setting.  This requires objective decision making, regardless of family ties and personal preferences.  Additionally, the management and employee relationship should be clear and accepted by all family members.  This requires that family members understand every job description and that their personal lives, family issues, and biases don’t interfere with employee productivity.   Establishing a clear chain of command and lines of authority for decision making will ensure that day to day business operations and run smoothly and will only contribute to the success of the business.  Additionally, it will ensure that there is no animosity between family member employees and non-family member employees.

 4) Remain unbiased and reward competence.  Providing sympathy jobs for family members can be detrimental to your business.  A good business owner or manager should reward employees based on performance and not just genetics.  Thus, family members who are also employees of the business should be held to the same standard. If a family member is not qualified for a certain position in your company or is a person that does not exhibit any true aptitude or usable skills, instead of providing a job for them out of sympathy, it is best to hire or promote someone who does and would be better suited for the position. Although, providing a family member with a job may feel like the right thing to do, unless they are qualified, they can do more damage than good when it comes to the success of your business. Additionally, showing bias or preference to family members over other employees is a fast way to cause tension within the business.

 5) Develop a succession plan.  To ensure that your business continues to grow and serve loyal customers when it comes time to retire is an important consideration to keep in mind in family businesses.  Planning for succession should be something done in advance taking into consideration the family’s goals, members of the next generation who are interested in staying in the business and leading the way, whether these members are good candidates equipped to lead the family business, and if there are no family members interested, what the family decides to do with the business.   Developing a succession plan well in advance can help avoid family feuds in the future as well as ensure that the business is left in good hands.

There are many ways to avoid future issues and discord among the business, ensuring success and a rewarding overall experience when starting and managing a family business.  To help you in your business journey and ensure a successful business venture, consult an experienced attorney at Kehr Law to help you with any of your business needs.   Some of the following business areas that Kehr law may be of assistance include employment agreements and other contracts, asset protection,  business succession planning, services agreements, inter-family business disputes, small business counseling, etc.