How to Grow a Family Business Smartly & Successfully

Posted on: June 14, 2019

Very often “mom and pop” businesses employ the founders’ siblings, children, nephews, and perhaps even a cousin or two. Maybe it’s a teenager’s summer job, or a way to pass time between college classes, or maybe it’s always been someone’s dream to join the family business. No matter what the reason is, creating a family-run business can be a great way to maintain your high quality of service and to espouse the values that you want your business to embrace and represent.

But despite the benefits of working with people you know and love, having a family business can be a little tricky. On one hand, the level of trust you have in your relatives who are employees is higher than normal, which can be a huge comfort to some people. On the other hand, family dynamics, grudges, and other baggage can really impact not only the business, but also family gatherings and social events.

If you have a family business that is ready to expand beyond the bloodlines, it’s time to take a critical look at your company and prepare it for the next stage of development. Here are some things to remember when you’re ready to grow your family business.

Share the Load

You can’t do it all yourself; it’s as simple as that. If you’re opening a second store, for example, you’re actually doubling the number of locations of your business, with the potential for twice the number of employees, twice the number of customers, and twice the amount of work. You can’t be everywhere at once, so don’t even try.

If you haven’t decided on who is going to take the reins at the “flagship” location (never call it the “old place”), you could cause a power struggle where different people get territorial about their jobs. Smooth out the process by making sure that everyone on staff knows well in advance of your planned expansion who is going to be in charge. Make sure that person is handling more of the idiosyncratic parts of your business, so they’re ready for curve balls when it comes time for them to assume the mantle of leadership. Ease them into their new position so the transition will hardly be noticed when the time comes. In order to do this successfully, have your chosen “co-captain” begin writing down all the procedures you have followed, including any variants that might be relevant. That book of procedures will become their “bible” to be referred to rather than calling you every time something comes up. It’s also a good time to review any procedures that need updating, modernizing, or retiring.

If your business isn’t in a physical location and the growth includes expanding your product lines or offerings within the existing business structure, you’re still likely to need help with the growth, and you’ll likely need to hire someone outside of the family. Be sensitive to how your new hire will feel as a relative outsider to your family business. Don’t be afraid to assign out tasks that you previously handled and to accept new ideas from your new hire. You may be surprised that a fresh take on things can be just what you need to propel your business forward.

Leave Work at Work, and Home at Home

Even if you aren’t trying to take your business to the next stage of growth (but really, who isn’t?), it’s a good rule to keep work and home separated as much as possible. If something goes wrong at work, it’s a good idea to stay until the problem is solved and everyone is comfortable with the resolution (as much as possible). Once you leave work, there’s no more talking about it until the next working day. That means no discussing it during the ride home, at dinner, or even at breakfast the next day.

Likewise, if you’re having a family argument at home, don’t let it come to work with you. Both staff and customers can sense the tension from a simmering argument, and that can create an unpleasant business environment.

When you’re in the middle of growing your family business, there are bound to be many things that don’t go as planned. Mistakes will happen. Expectations won’t be met at first. Things that you’ve done a thousand times and seem glaringly obvious to you might confuse or frustrate your entire team. Growing pains can be frustrating, but taking it out on your employees – family or otherwise – will only exacerbate the situation, cause bitterness and resentment, and can lengthen the amount of time it takes to reach a new equilibrium.

Learn methods of compartmentalizing your emotions so you can put any disagreements on hold and resume them later in the appropriate place. Encourage others whom you might find yourself arguing with regularly to learn them as well. Besides helping your mental focus on being where you’re supposed to be, you’ll find that this is an effective “cooling off” period as well, so the people involved can approach the problem more rationally later on.

Be Prepared for the Long Haul

It may have taken you years to build your family business, decades even. There have likely been countless hours and weekends that have been sacrificed so that the family business could grow and thrive. Now that you’re ready to grow your business, expect to suffer these growing pains (at least in part) all over again. Sure, you’ve picked up a bag of tricks along the way that helps make your business run smoothly, but new business growth will bring with it a whole new set of pitfalls and quirks that will need attention, fires that need to be put out, and procedures that need to be developed.

When making the decision to grow the family business, don’t make any short term plans for vacations, or long term plans like retiring. Your family is going to need your hands-on involvement and guidance to help navigate the growth of the company. Growing the business means a certain amount of upheaval, and your employees need to know you’re going to be there for as long as it takes to make sure the company’s growth is a success.

Knowing that you are still guiding the ship, even as it becomes a small flotilla, will go a long way to reassure your family, staff, and customers that the values that you built your company with will remain a part of the business, no matter how much it grows.

Let Your Business Values Reflect Your Family Values

Families tend to share a set of common values (except perhaps politics at the Thanksgiving table) that were handed down to them by their common ancestry. It’s these core family values that your customers have grown to appreciate as a hallmark of your business. It’s likely that the reputation of your company is built on these family values that evolved into your company’s values. Don’t sacrifice the personal, family nature of your business just because it’s growing. Make sure you let your customers and staff know that although the company may be larger than it had been, that doesn’t make it any less of a family business.

When advertising that your business is growing, point out that the company isn’t just getting larger, it’s increasing the number of places that consumers can get what they need, or offering new services that the community has been demanding. It may even be a good idea to write out your company’s values as a mission statement, so that everyone who works for the business can see, in writing, what your business stands for.

Your family values are very much a part of your company’s brand. Growing your family business doesn’t mean you should compromise on the company’s values. By having business values that mirror your family’s values, you can keep the integrity of your family business whole.

Hire People Who Reflect Your Values

Eventually, even in the largest families, you’re going to run out of actual family members to hire for your business. When you start looking for employees to bring into your family business, you’re going to start developing criteria for whether or not these people will fit into your extended “family.” These criteria will evolve into your hiring policy that will guide what to look for when it’s time to choose new employees.

Hiring the right people to work for your business can be a daunting task. If you’ve always relied on family, it might be hard to bring in an “outsider” no matter how good their qualifications might be. There are many resources for personality tests, as well as testing centers the provide evaluations of potential employees for companies. It may be worthwhile to find one that can provide you with evaluations that will give you insight into the type of person you’re considering hiring.

Your customers will expect you to bring people on board who will give them the same care and attention to service that they’ve come to expect from you and your family. Carefully vetting potential employees will ensure that you choose the right people to represent your business.

Everyone Must Be All In

Just because it’s a family business doesn’t mean that anyone can slack off when they feel like it. Even if “grandpa will understand” or “it’s only one time,” everyone in the business has a role, and the other employees of the company, family or not, rely on everyone else to be at their jobs all the time, without exception. Emergencies notwithstanding, absences can cause bottlenecks, poor service, or other problems which will negatively reflect on the business.

Having a cavalier attitude towards one’s responsibilities, simply because it is a family business, should be completely unacceptable. This attitude affects morale and can cause resentment by other family members who are pulling their weight. What’s worse, it’s disrespectful to the rest of the family. If anything, family members who are employees need to put in extra time and effort, precisely because it is the family business and they are (or should be) personally invested in it.

When anyone in your family makes a commitment to be a part of the business, be sure they are 100% committed. If they can’t, let them find a job somewhere else. After all, just because it’s a family business doesn’t mean everyone in the family has to work there.

There Can Be Only One

At the end of the day, there can’t be two bosses. One person has to ultimately be responsible for all of the high-level decisions for the new, larger company. You need to establish a concrete hierarchy of the company. Whether it’s you, or someone else who has been groomed for the position, that person must have the final say in business decisions. All too often businesses fracture when a family votes on the direction a company should take. The vote turns into a stalemate, the family turns acrimonious, and ultimately the business suffers.

This is why big businesses have board chairs, CEOs, and presidents. Until you’ve put a solid board in place, the top-level decisions that guide the direction of the business should only be made by one person. When it comes to making important decisions, too many opinions can prevent things from getting done.

Family businesses in the United States employ over 98 million people. They are considered the backbone of the American economy. From small corner delis to Walmart, family businesses come in all shapes and sizes. Every one of those businesses was built on dreams, hard work, and dedication by families large and small, with the values of those families as the cornerstone. If you grow your family business with a commitment to values and your core business proposition, your growth will hopefully be as smooth and successful as possible, even if there are a few bumps along the way.

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