17 Things You Need to Know About Running a Family Business

Many of the usual challenges that confront small to medium-sized commercial pavement sweeping business owners are compounded in multi-generation family businesses. On the other hand, many typical business management difficulties have less effect on family-owned businesses. To fully appreciate the realities of operating a family-owned business, it helps to be aware of some common circumstances that family business owners face in their sweeping services companies and some suggested solutions.
Business interactions take place along an entirely different spectrum of interpersonal dynamics than the one on which non-family members interact, even inside the same workplace. The varying degrees of rights that family members have even when it comes to every-day business matters like purchases, sales, distribution of profits, etc. take on a new dimension of effects when close family relationships are involved.
Plus, there are layers of family members’ financial interests that can have a blanket impact on all employees, including non-family members, such as in major shareholder succession, leadership changes, significant family job performance matters, and so much more.
So, yes, the prospect of succeeding in a family business is complicated, by nature. Here are some tips for family business owners who want to set up their commercial sweeping services operations to thrive for generations of family ownership.

1. You Need a Clear Policy for Hiring Family Members.

Set your family hiring policies as a key piece of your business plan. This important preparatory step can help you avoid potentially serious financial consequences to your business down the road, which can arise at the worst time due to simple wrong assumptions, misunderstandings, or unclear family business policies.
Your business management team should establish some basic guidelines to use in evaluating the best interests of the family and the business when weighing the idea of hiring any particular member of the family.
Employment in the commercial pavement sweeping industry is not for everyone. Family members who can be expected to perform well as employees of such a service business should be considered eligible to apply. But, those that do not demonstrate the necessary temperament, or the needed level of capability and motivation, or education, or other required training prerequisites should be advised to find another kind of employment.

2. There’s a Right Way to Handle Family Employees Evaluations and Promotions.

Provide all your family members who are employed in your company with a clear job description. Conduct performance and skills evaluations, to establish a system of accountability. Not all family members can be expected to advance to top company leadership roles. However, family members who grow up around the business tend to develop a solid understanding of how sweeping and associated administrative operations work, so they’re likely to be able to play very helpful roles in the field and/or in the business office.

3. Business Ethics and Family Businesses Need to Be Top Priority.

Every family member employed in your business must be able and willing to help ensure that the family’s ethics and basic values are honored at your company at every level of family employment. Allowing a drift away from your business’s ethical core and its culture of your family’s workplace values can erode performance quality, workplace culture, customer satisfaction, and your business’s reputation in your community.
If your business has employees on board that are not family members, then remember that their and their families’ interests are also at stake. So tread carefully into risk-taking, and carry the rightful weight of responsibility for the needs and goals of everyone who stands to be impacted by outcomes of decisions you make in managing your company and in your future business planning.

4. Have a Clear Hierarchy of Authority.

Having a clearly recognized and ultimately responsible leader to provide the family’s business direction fosters a company culture that is inclusive of all employees and that promotes progress, while also helping maintain the best of the family’s management traditions.
Family members new to the business may be encouraged to spend time in a series of roles, to develop a deeper understanding of the industry and the business. More experienced family members can help continue instilling the family business founders’ core central principles. Senior family members build an estate plan that well represents the business’s value, the potential for growth, and its current and future obligations.

5. Family Work Dynamics Need Proactive Management.

Naturally, personal family matters can sometimes become priorities that must be addressed at the office. Just assuming that everyone in the family will be discrete can lead to unexpected incidents.
Meeting the challenges of scheduling, quality control, managing employee turnover and training, marketing and generating sales, equipment maintenance, and activity tracking make the sweeping business a highly enterprise business to manage. So, set boundaries, to help prevent family drama at work that can negatively affect operations and other workers, as much as possible.
On the other hand, it is important to develop a process for addressing family issues that do emerge at work. Have all family members who will be working in or visiting the business commit to agreements on how everyone will handle family conflicts in and around the workplace and elsewhere.

6. Leaders of Family Businesses Need to Stay Flexible on Priorities of the Moment.

Even the best systems for managing family issues are likely to be met with certain problems that require immediate action, to help the family continue to thrive. In the same way that business needs sometimes take priority over family preferences and demand your full focus, the family sometimes needs that kind of full attention.
So, don’t ignore problems that arise in the family when they seem too inconvenient or too much in conflict with your daily routine. To resolve problems and meet family needs for healthy functioning. So, for the good of your family and your business, know when it’s time to turn your attention fully to family needs.

7. Incorporating Non-Family Members in Leadership Can Lend Greater Balance.

Along with family members who are involved in the management of the business, as your sweeping company grows, consider putting in place an advisory board or board of directors that includes some members who are outside the family can be very helpful in providing experience and skills missing among the family members.
Having knowledgeable non-family participation can also help in balancing the management of issues in instances of conflicting positions or interests. An independent party can lend greater objectivity and measured professional decorum to your company’s board-level meetings and decision-making processes.

8. Assign Professional Roles Based on Abilities, Not on Family Relationships.

It can seem like the path of least resistance just to give family members the jobs their parents or spouses — who are all related to you — think they should get. The last thing you want is strife in the family due to business decisions that may offend people. While giving a family member their desired position can avoid awkwardness in the short term, everyone involved will be better off if you prioritize the long-term good of that family member and your business.
When someone is not suited for success in a particular job, giving them the job anyway cannot be expected to lead to a happy outcome over the long term. It’s more likely to end up causing bad feelings among employees who have to take up the operational slack created by an ineffective family employee.
So, find alternative roles within the company that does make sense for each person. If there are no such positions available, then it’s wiser and kinder to guide the family member toward other opportunities outside the company.

9. New Generations of Leadership Should Embrace Their Own Sense of Business Direction.

Times change, generational roles in family business leadership change too. Along with all those changes, the needs of a family business naturally change with the world around them. Upcoming generations of family business leaders are growing into their management roles in the light of new sweeping industry methodologies, technologies, and evolving demands of customers.
To keep up, and plan effectively for the next period of short- and long-term business financial sustainability and growth, and team motivation and engagement, the next generation of management needs the support and encouragement of those who’ve laid the groundwork on which they can be free to innovate.

10. Understand and Address the Needs and Goals of Each Family Member.

Every member of the family has their own needs and goals, whether they’re employed in the family business or not. Their needs and priorities are likely to become altered over time, as their lives are affected through the years by various events and typical changes.
Think of family members who hold an ownership stake in your business as investors. They have their challenges, plans, and objectives, both business-related and personal. So, work to avert issues for minority stakeholders, and in the process, you can help prevent their problems from becoming larger issues to address.

11. Most Feuds Among Families in Their Businesses Have Typical Causes.

Causes of family feuding in family-owned companies typically stem from favoritism, inconsistent compensation policies, non-merit-based promotions, and other unmet expectations of family employees due to unequal treatment. Not only can these problems cause rifts between family members working in the business, but when some family members are not performing effectively in a family business, the enterprise can also be negatively financially impacted.
Efficiency is poorer and productivity and quality suffer. The most talented family members and non-family employees can begin to fear financial failure and move on to more secure employment elsewhere. Such conditions naturally put a strain on morale and relationships between family members.

12. Family Businesses are Freer to Serve Their Social Impact Goals.

One great thing about managing a family business is the freedom to think more in terms of long-term goals than corporate leaders who are required to maximize the potential to squeeze out every penny from every quarter. Many family business leaders are inclined to prioritize their families’, employees’, and customers’ interests and preferences over short-term profit maximization objectives.
This freedom empowers family business owners to devote some of the company’s resources to promoting social impact initiatives that benefit their community and the world, which of course, creates a better place for their own families and their employees’ to live. Those are some kinds of critical opportunities that make being in a family business such a personally meaningful journey.

13. There are Tax Restrictions on Family Businesses.

There are also tax restrictions and employment regulations governing family members working in a business as well as legal considerations in succession planning, and general HR recommendations for the management of businesses with family members as employees. The IRS needs to be sure that their work is necessary and normal for your business, to accept their pay as legitimate business expenses.
Just manage your children who work in the business the same way you manage all other employees in the same kinds of roles. Keep thorough employee records, including payroll hours, amounts paid, and details of services rendered. Use your standard business paychecks to pay family members, and pay them on the same schedule as for other employees.

14. Hiring Family Members Can Reduce Taxes for Your Business.

There are major tax benefits for family businesses. You’re not required to pay the unemployment tax for your spouse, and you may not be required to pay income tax or Social Security for your children who work for your business.
Keep in mind, however, that to qualify for business tax benefits from having family members working for your business, you’re required to pay legal wages, and your family members’ work must be of actual benefit to the business, and as mentioned earlier, the work they do must be of a nature that is normal for the business. You must also comply with child labor laws.

15. Family Business Planning is Most Effective When Done Up-Front.

In a large commercial sweeping company, it is recommended that parties with financial interests in the business agree to a formal structure of ownership interests and managerial controls. Establish compensation structures for all family members who have a financial interest in the business. Determine what form their shares of interest are to be and how much interest each family member will have.
Are the family members to be LLC partners, trust participants, or other types of shareholders? Decide how voting rights are to be exercised. Set up each family member’s shares of interest according to the kind of interest shares that make the most sense for serving their particular personal needs and interests.

16. Succession Planning Helps Protect Your Family and Business.

For family business owners strategizing to scale their enterprises and keep the business under control of their enterprises over the next generations, succession planning can establish critical plans for future leadership of the company.
Establishing a knowledgeable board can help in setting retirement policies, form employment contracts, choose leadership, etc., can help avoid conflicts about the fair division of assets, family members’ roles, and other key issues, to help the family’s company remain under the family’s management through future generations.

17. Making Time and Opportunities for Family Fun is Good for Business.

By any means, share some activities and interests with your family members that do not revolve around working together. Enjoying some quality personal time together is essential for helping everyone in the family stay bonded on a personal level.
Aside from company picnics or other business culture activities, set up some regular family activities, just for getting away from the business and spending time together, laughing, relaxing, and having fun together.

The Future of the Family Business

There are advantages for longevity in family businesses. Your family business is not restricted by the need to serve outside shareholder priorities. This means you can feel free to strategize for long-term success without those external pressures. You can plan in ways that can position the business better to overcome changes in your market, in the industry more broadly, or the larger economy.
Still, fewer than a third of family businesses (about 30%) make it to second-generation family management, and a mere 3% make it to the fourth generation. What causes the numbers of success stories to be so low in family businesses over the generations? There are many reasons why families choose not to continue in business. They’re often voluntary and positive changes of direction for new generations of young professionals with different aspirations.
For the best chance of securing the future of your family business for generations to come, key advice includes avoiding bringing in new family members to career positions in your company who cannot contribute well to the success of the business. Such serious hiring mistakes can often do extreme damage to the future potential of a small to medium-sized family business than can be caused by outside hiring problems.
The negative working environment that an instance of bad hiring can create can put the entire future success of a small family sweeping business at risk. Further, having to terminate the employment of a family member involuntarily can seriously damage family bonds, even permanently fracturing the family.
So, the over-arching advice for family businesses planning to operate for generations to come — maintain self-discipline in business management decision-making as it pertains to the family. Set and obey your own rules of business administration, prioritize nurturing shared family values and ethics in operations, and stick with practical decisions that will be most effective in maintaining optimal functioning of your business and protect the healthy long-term relationships that make a happy family.

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