5 Tips For Success In The Family Business5 Tips For Success In The Family Business
November 17, 2014
For many in the cattle business, ranching is synonymous with family. Working with multiple generations is both a blessing and a challenge, as varying personalities, ages, priorities and opinions can put a strain on even the most tight-knit of families.
Whether it’s working on an estate plan, bringing another family member into the operation, or making day-to-day decisions, it’s important to keep a few things in mind to ensure success for the operation while keeping the family intact.
“More than 70% of all businesses are family businesses – they account for a significant number of new jobs and a large portion of the GDP. They’re motivated by profits, but also by other important considerations: pride in the family name, building something for future generations, philanthropy. For those reasons, they contribute in tremendous ways to social stability. They make our communities better,” says Henry Hutcheson, a certified Family Business Advisor, founder of Family Business USA consultancy, and author of the new book, “Dirty Little Secrets of Family Business.” Hutcheson offers five strategies for being successful in a family business, and I think they’re worth passing on.
“Keep the lines of communication open,” he says. “Schedule regular family meetings to discuss issues of concern and topics such as business transition, business performance, and responsibilities. Include all of the family members, no matter where in the hierarchy their jobs fall – exclusion creates animosity. Create a family manual that lays out the ground rules for how the meetings will take place to ensure everyone gets a chance to be heard and impediments to communication are left at the door.”
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2. Establish roles.
Assign clear roles and responsibilities,” Hutcheson advises. “As a family member, it’s natural to feel that everything is ‘my’ business. However, not everything is every family member’s responsibility. Job definitions prevent everyone from jumping in to tackle the same problem, and help ensure the business runs smoothly.”
3. Maintain up-to-date financial records.
“Keep good financial data,” he says. “The downfall of many small businesses and family businesses is not having solid data. Have a single point of contact to manage the finances. If you’re small enough, you can rely on a family member. Otherwise, you’ll need to bring in a qualified accountant. You may cringe at the cost for this, but the difference between a good accountant and a bad one is the difference between knowing exactly where you are on the road and trying to drive with a mud-covered windshield.”
4. Avoid overpaying family members.
“Parents in family businesses tend to overpay the next generation, or pay everyone equally despite differing levels of responsibility,” says Hutcheson. “Both are bad practices. The longer unfair compensation practices continue, the messier it will be to clean up when it blows up.”
5. Don’t hire unqualified relatives.
“Competence is key,” he says. “Family businesses are a conundrum: The family aspect generates unqualified love, while the business side cares about profits. Thus, family members will be hired to provide them with a job, even though they’re not qualified. The remedy is to get them trained, move them to a role that matches their skills, or have them leave.”
Do you work with multiple generations on your ranch? How do you make it work? Share your advice and experiences in the comments section below.
The opinions of Amanda Radke are not necessarily those of Beefmagazine.com or the Penton Farm Progress Group.
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