Managing the Dynamics of a Starting a Family-Run Business
Venturing into entrepreneurship with your family comes with a host of unique challenges. When family members work together, it’s crucial to navigate the dynamics of each relationship and the team as a whole — all while maintaining a successful company.
The fact that family members trust one another and have a deep desire for success can make the process more comfortable. Below, the Laguna Beach Chamber of Commerce shares some practical tips to help you and everyone involved build lasting success together!
Common Business Ideas for Families
Launching a company requires unique ideas that attract your target audience. Many families leverage their specialties and passions by trying something like a family-owned restaurant or a retail shop.
When family members possess complementary skills like marketing, accounting, and sales, a consulting business or marketing agency is often the best route. You must choose a business idea that you enjoy so that you (or anyone else) don’t fall prey to burnout.
Choose the Right Legal Structure
Establishing the appropriate legal structure is critical for many reasons. A limited liability company (LLC) protects business owners from legal liability and provides flexibility in operating the business. When business disputes arise, an LLC structure can separate personal assets from business assets, thereby shielding family assets from legal claims. Moreover, an LLC ensures flexibility in the ownership and management of the business.
Producing Great Content
Content is king in today’s digital age, and producing engaging content can do wonders for attracting and retaining customers. Content creation is a fantastic strategy for showcasing a family-run company’s values and mission while differentiating the business from competitors.
You might also use social media marketing and other techniques to build your brand. When utilizing social media marketing, make sure your team understands your target audience so you can boost engagement and create a loyal following. The best approach is to consult online resources to learn the ins and outs of content marketing.
Determining Ownership and Compensation
Deciding ownership can be a complicated matter for family-run businesses. Will all family members have an equal share, or will you base ownership on people’s individual investments? Deciding who gets what share is an important conversation to have before launching the company.
As a family, consider a situation where one family member enjoys managing the business but may not have invested much money into it. In that case, you might need to determine ownership according to the input and impact each family member brings to the table.
Whatever you decide, make sure you solidify your agreement with a written contract signed by every family member taking part in your business. Create a PDF of your formal ownership agreement so everyone has easy access to a digital copy at all times in case any questions or disputes arise. Using a PDF also allows you to request signatures from family members you can’t meet up with in person for a signing. You can use a PDF filler (check this one out) to request signatures, and then you can securely email signed copies to everyone.
Defining Roles and Establishing Boundaries
Finally, it’s critical to define roles when you work with your family. It may prove to be challenging to separate familial and business relationships, so you’ll want to communicate effectively. Identifying rules can help minimize disputes over who is responsible for what as well as provide a platform for accountability.
Establishing boundaries is also essential for reducing conflict. Establish working hours and any rules that govern the operation of the business. Setting clear boundaries will ensure that your family-run business remains professional and reduce the potential for misunderstandings.
The Bottom Line
Starting and managing a family-run business is sure to come with challenges, but you can successfully navigate through the dynamics by implementing a few strategies. Remember to start your business idea with passion and focus on creating valuable products or services. You also need to choose the best legal structure for your business, develop quality content, have a signed ownership agreement, and establish expectations, rules, and boundaries. Your family business can have a significant impact on your local community and economy, and you can build a successful and fulfilling enterprise with effective management and planning!
Join the Laguna Beach Chamber of Commerce to get access to exclusive resources that will help you grow your business in our beautiful community!