Guide to Operating a Successful Family Business

Here are four essentials for striking the right balance when operating a family business.

1. Set some boundaries. It's easy for family members involved in a business to talk shop 24/7. But mixing business, personal and home life creates a volatile brew. Limit business discussions outside of the office.
2. Establish clear and regular methods of communication. Problems and differences of opinion are inevitable. Consider weekly meetings to assess progress, air any differences and resolve disputes.
3. Divide roles and responsibilities. While various family members may be qualified for similar tasks, duties should be divvied up to avoid conflicts.
4. Treat it like a business. A common pitfall in a family business is placing too much emphasis on "family" and not enough on "business."

Tips & Tactics
Helpful advice for making the most of this Guide

• Family-owned businesses offer unique benefits. One is access to human capital in the form of other family members. This can be a key to survival, as family members can provide low-cost or no-cost labor, or emergency loans.
• Treat family members fairly. Qualified family members can be a great asset to the business. But avoid favoritism. Pay scales, promotions, work schedules, criticism and praise should be evenhanded between family and non-family employees. Don't set standards higher or lower for family members than for others.
• Put business relationships in writing. Be clear up front about compensation, exit plans and other details before they become a problem.
• Develop a succession plan. A family business without a formal succession plan is asking for trouble. The plan should spell out the details of how and when the torch will be passed to a younger generation.
• Require outside experience first. If your children will be joining the business, make sure they get at least three to five years business experience elsewhere first; preferably in an unrelated industry.

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