Family Members in Business Together – Is it Right For You?
Running a business with members of your family is a desirable prospect for some people; let me give you five (5) items to consider before you get to a point of no return that may influence the chances of you business not being successful and possibly straining your family relationships.
Nowadays more than ever, home based and centralized businesses have become a perceptible place in many peoples mind, for families and extended family members to begin their entrepreneurship journey. As in the business world, each family member may provide a different skill set that actually can contribute to the successful start of a business. However, extensive consideration and a lot of pre-planning must go into the business plan before you launch full force or extend any funding into your business project.
Five (5) items you need to consider prior to committing to your *Family Business*
1. Create and develop a Business Plan. The business plan as a minimum should describe the Mission and Vision of the business, product or service to be provided, long and short term goals (include financial expectations), roles and responsibilities. This needs to be completed independent as possible of family member role allocation. Why, because you do not want the beginning of your business plan to get bogged down in the creating phase.
**Note: The plan can of course evolve as you get farther and further into the process, my point is to have a structured way to start planning and discussion, especially if you are going to seek institutional funding, they will require a very formal business plan.
2. Define Your Financial Commitment and Goals. How much money is going to be required to start the business, maintain overheads (standard recurring expenses) and of course expected salaries. Where is this money coming from? There needs to be some real sole searching done in this area, benchmarking of other similar companies and a careful look so you do not impoverish your family if things don’t start as fast as expected. The financial plan should extend a minimum of two years, with a goal to break even the first year. Seek out financial professionals to help you with this if there is any doubt what amount of money it may take to start your business, better safe than broke!
3. Establish a Schedule of Major Milestones you expect to achieve during the first year. You can be as detailed as your personality allows. The Milestone chart needs to be a large visual reminder to every one of expectations and what you all are working towards. The milestone chart will also serve to keep everyone focused in the event *new ideas* and innovations crop up for discussion that may take peoples focus off the original plan.
4. Identify and Define the Roles and Tasks of each position a family member may fill. This is critical for you as the business *leader* and each family member to clearly help each other and not have overlapping tasks being confounded or duplicated. You want to be as efficient and productive at the start of a business as possible. You can not afford to have any wasted effort or the potential internal conflict of who does what and when. Have a discussion on how conflicts and problems will be addressed and who will be the final decision maker. Everyone must buy into and agree to this process at the beginning because you do not want infighting to carryover into the family side of your life.
5. Separate the Business and the Family activities. My experience is you must leave the business out of family get together or events as much as you can. Sure there may be a discussion or two, but every member of the family must continue to put for the effort into maintaining the family structure and values as hard as they are putting effort into the business. You want to minimize the carryover from the business to the family and deal with any conflicts when they occur. What happens a lot is the tensions of the business begin to creep into family events; you must recognize and deal with these situations immediately. I know I’m repeating this point, but it is a backbreaker of many families and small businesses.
A family can have enough of normal stresses in there day to day activities raising children, maintaining a household, paying bills, getting the kids to their sporting events…on and on the list goes let alone starting a business, give your situation careful consideration.
I support you in your entrepreneurship and desire to be independent with the caveat; do your preplanning and preparation before getting into a *family* business because you can not let the family part of your life fail!
Nowadays more than ever, home based and centralized businesses have become a perceptible place in many peoples mind, for families and extended family members to begin their entrepreneurship journey. As in the business world, each family member may provide a different skill set that actually can contribute to the successful start of a business. However, extensive consideration and a lot of pre-planning must go into the business plan before you launch full force or extend any funding into your business project.
Five (5) items you need to consider prior to committing to your *Family Business*
1. Create and develop a Business Plan. The business plan as a minimum should describe the Mission and Vision of the business, product or service to be provided, long and short term goals (include financial expectations), roles and responsibilities. This needs to be completed independent as possible of family member role allocation. Why, because you do not want the beginning of your business plan to get bogged down in the creating phase.
**Note: The plan can of course evolve as you get farther and further into the process, my point is to have a structured way to start planning and discussion, especially if you are going to seek institutional funding, they will require a very formal business plan.
2. Define Your Financial Commitment and Goals. How much money is going to be required to start the business, maintain overheads (standard recurring expenses) and of course expected salaries. Where is this money coming from? There needs to be some real sole searching done in this area, benchmarking of other similar companies and a careful look so you do not impoverish your family if things don’t start as fast as expected. The financial plan should extend a minimum of two years, with a goal to break even the first year. Seek out financial professionals to help you with this if there is any doubt what amount of money it may take to start your business, better safe than broke!
3. Establish a Schedule of Major Milestones you expect to achieve during the first year. You can be as detailed as your personality allows. The Milestone chart needs to be a large visual reminder to every one of expectations and what you all are working towards. The milestone chart will also serve to keep everyone focused in the event *new ideas* and innovations crop up for discussion that may take peoples focus off the original plan.
4. Identify and Define the Roles and Tasks of each position a family member may fill. This is critical for you as the business *leader* and each family member to clearly help each other and not have overlapping tasks being confounded or duplicated. You want to be as efficient and productive at the start of a business as possible. You can not afford to have any wasted effort or the potential internal conflict of who does what and when. Have a discussion on how conflicts and problems will be addressed and who will be the final decision maker. Everyone must buy into and agree to this process at the beginning because you do not want infighting to carryover into the family side of your life.
5. Separate the Business and the Family activities. My experience is you must leave the business out of family get together or events as much as you can. Sure there may be a discussion or two, but every member of the family must continue to put for the effort into maintaining the family structure and values as hard as they are putting effort into the business. You want to minimize the carryover from the business to the family and deal with any conflicts when they occur. What happens a lot is the tensions of the business begin to creep into family events; you must recognize and deal with these situations immediately. I know I’m repeating this point, but it is a backbreaker of many families and small businesses.
A family can have enough of normal stresses in there day to day activities raising children, maintaining a household, paying bills, getting the kids to their sporting events…on and on the list goes let alone starting a business, give your situation careful consideration.
I support you in your entrepreneurship and desire to be independent with the caveat; do your preplanning and preparation before getting into a *family* business because you can not let the family part of your life fail!
posted by Kent Jacobson, a.k.a. "Mr. Success" at 5:49 PM
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