Practical Basics for Family Businesses

For those of us who mix family and business, we’re aware that there are both benefits and costs to taking this route.  If the national economy is any indication, the benefits outweigh the costs — with roughly 62% of the GNP in the “Western World” coming from family enterprise.

To stay on the benefits side of the equation, Tom Berry of Palo Alto Software offers the following best practices for ensuring your family business remains a success, here are the highlights:

  1. Clearly Define Roles within Business:  By being careful of which roles family members accept within the business, one can avoid the pitfall of hiring the wrong person for the job.  Berry advocates avoiding subordinate relationships in your personal life dictating subordinate relationships within a business — for example, groom your son before offering him a C-level position — allow him to learn the business and then earn his C-level role from his own merit.
  2. Define Rules for Environments:  Make sure that when you’re at the business, the topics are business related; conversely, when you’re at home — leave business topics for the office.
  3. Observe Communication Patterns:  If a business conversation begins to trend toward family issues — stop and refocus.  A constant self-awareness in this area is required for continued success.
  4. Equitable Distribution:  Trust is a powerful advantage for family business leaders, remember to distribute the monetary benefits of that advantage accordingly.
  5. Commit to Lifelong Learning:  Staying at your best is the most effective way to create a lasting success with your business, one that can transcend generations.

Berry also advocates the use of a “written family business code of conduct” to cement the above principles in writing.

 

For more information on this topic, consult the Business Insider article here.

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