10 Golden Rules Of Family Business
I was at the wheel of my dad’s car and we were driving to our next call. I was 22 and had just joined my older brothers and dad in the family business. Dad and I spent a lot of time together looking at jobs.
Normally, we’d ride together and focus on the technical side of the trade. But, he never missed the opportunity to talk to me about the other things it takes to run a company. My business education started when I was a little boy and I’d ride along with dad to a lot of the “middle of the night” service calls that he had to handle from our home.
Dad was patient. He allowed my brothers and me to sit in on a lot of his meetings while we were still just teenagers. It made sense to him to get us involved early since there was so much to learn.
Family FirstThat day’s lesson was all about what it takes to work together in our family business. Having worked with his dad and his brother-in-law, he knew what it took to keep both the family and the family business running smoothly.
Plus, he’d seen his friends and competitors in other family businesses fall apart when the in-fighting began with the arrival of the second and third generation. He was determined not to let this happen to his family and the company he had built.
This was no easy thing to avoid. My brothers and I had very different personalities, temperaments and agendas. Naturally we were all young and battles were bound to happen. And they did. That’s why dad was especially anxious to pass along the secrets to getting along with his dad and brother-in-law.
There were just a couple of simple guidelines that he made my brothers and I agree to follow. To remember that, first and foremost, we are a family. So, after the work is over, act like it. And that we’ll make more progress pushing in the same direction to our mutual goals than exercising our egos by pushing against each other.
It worked very well at the beginning. But as time went by, new issues continued to come up that the simple guidelines weren’t designed to address. It’s very hard to think of everything that can affect both family harmony and the company’s well-being.
We managed to work through these issues. But, they did create unnecessary hard feelings and stress for everyone involved. Since it was my turn at the wheel, I continued to search for a more comprehensive set of guidelines to follow in future conflicts.
After much trial and error, I put together “golden rules” for working in a family business.
10 Golden Rules For A Family Business1. Have a written set of guidelines on how the next generation will enter the business.
2. Have a written job description with a corresponding list of responsibilities. A company organizational chart is needed, even if your name appears in every box on the outline. Then, agree on who responds to what emergencies, provides backup coverage and, finally, have everyone sign off on it.
3. Coordinate when vacations are permitted, how much time off is paid for, the amount of salary taken, how bonuses will be paid and what legitimate expenses are to be put through the business.
4. Have a neutral party in place to act as an arbitrator before you reach an impasse.
5. Remember that at the end of the business day you are still family. So, act like it and mandate “nonwork-related” designated time together.
6. Create a buy-sell agreement and keep it current.
7. Have weekly scheduled meetings to discuss current and long-term projects and to set priorities.
8. Have an agreed-upon business plan and operations manual.
9. Hire the best-qualified accountant and lawyer you can afford to advise you as a group.
10. Pay special attention when extended family members and friends are involved in any area of your business. Whether they work in the business or are customers, agree on what procedure to follow should you need to get rid of them either as a staff member or as a customer.
If you take the time and make the effort to follow these golden rules, I know that you will enjoy working together more and success will continue on to the next generation.