Family Members in Business Together – Is it Right For You?
by Kent Jacobson
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 your
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 people's minds 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 as
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
toward. The milestone chart will also serve to keep everyone focused in the event
new ideas and innovations crop up for discussion that may take people's 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
cannot 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 carry
over 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 forth 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 back breaker of many families and small businesses. A
family can have enough of normal stresses in their 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 cannot let the family part of your life fail!
About the author: Kent Jacobson, a.k.a. "Mr. Success" is a trusted authority in the
success field and provides valuable success information for free through his website
at: Shortcut 2 Success .
by Kent Jacobson
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 your
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 people's minds 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 as
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
toward. The milestone chart will also serve to keep everyone focused in the event
new ideas and innovations crop up for discussion that may take people's 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
cannot 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 carry
over 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 forth 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 back breaker of many families and small businesses. A
family can have enough of normal stresses in their 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 cannot let the family part of your life fail!
About the author: Kent Jacobson, a.k.a. "Mr. Success" is a trusted authority in the
success field and provides valuable success information for free through his website
at: Shortcut 2 Success .
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