How To Manage A Family Business

Involving a family member in a business may be a brilliant move or the worst mistake of your life. That is if you fail to foresee and prepare for the numerous changes that will inevitably occur when a business is turned into a family business.

Speaking for myself and with my experience as a family business owner, various challenges you will be facing come from the fine line separating family from business affairs. We have all heard that undying statement: Leave personal matters away from your business and business matters from your personal matters. This changes the moment you turn your business into a family business. There will be a lot of arguments involved. Don’t get me wrong, and I’m not trying to discourage you. I just mean that if you plan to manage a family business, you need to do a lot of things to make them work. Start out with the following:

Plan ahead. For those of you who are just planning to involve your personal team in the business, be warned: Things will start to take a turn, especially for those who are underprepared. I have had two businesses with my wife already. What that means is that we have bickered a lot. It’s not all that bad because it helped us prepare well and learn our differences. With this information on our mind, we were able to plan ahead, divide the tasks, and assign the tasks based on the strengths of each other. This is the reason, as I believe, behind the success of our business.

Today, not just as a business owner, but also a father, it is my job to carefully thread out the path that my son, who is now with us in the business, will have to take once my wife and I hit “that” age. He needs to start somewhere, and take a suitable pace in climbing up until he replaces us someday in the company. But in order for him to effectively do that, we need to plan each step of the way, assigning bigger tasks, one after the other, and letting him handle things until he learns to grasp the whole process – not just dumping him in a pile of problems.

Be clear on assigning tasks. Define their roles clearly in the company. If you are going to give them a certain amount of power and authority, define the boundaries. When it comes to power and boundaries, following and exercising them affect both you and the person holding it–the moment he decides to exercise his authority, you have to respect it. The only time you can interfere is if he exceeds that power or if the consequence will be too expensive. You gave them the right, and now you have to respect that right. This is why you have to carefully plan out and explain clearly the different roles and powers that your family members in the business have.

Do not abuse personal relationship in the business. However, the opposite sometimes happens. The person holding a higher authority abuses his family members under him. Some family members/employees experience being underappreciated, underpaid, and generally not cared for just because the one with a higher authority feels confident that everything is fine as is and that everyone will understand. Familiarity breeds contempt, right?

Remember that having a family member in the business does not create any right on anything at all. Remain fair; reward and penalize properly. If you know for a fact that a family member brings home work for your business because the workload is truly too heavy, then that should be taken into account.

Get everyone involved in the process. We have discussed a lot of do’s and don’ts in the process that it seems having a family business is daunting. Not entirely. The best thing about having family members in the business, which cannot be overstated is the fact that you have your team in the process. A family that functions well and supports each other will make a great team in running the business. Everyone will be thinking of how to grow the company for the benefit of the real stakeholders and reason for the creation of the business–the family. You also have your constructive critics who are willing to step up and point out the decisions that may harm your own company. A well-functioning family builds the business even bigger, which, in the process, will also help every member of the family grow together.

Most businesses in the Philippines, even the large corporations, are family businesses. For better or for worse, this state of affairs seems destined to continue for a long time to come. It is of vital importance that those in charge recognize the challenges and strengths inherent in a family and to plan accordingly.

*Originally published by the Manila Bulletin. C-6, Sunday, August 23, 2015. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.