Starting a family business can be a daunting proposition. When family members go into business together, there are many important things to take into consideration. New England Paving is a successful family business with many years of experience. Here they share their top tips for prospective family business owners.
Have an Adaptive Business Plan
When starting any kind of business, it is crucial to have a solid business plan. Before you get started, it is important to do a market analysis to find out whether or not there is a need for your business in the community. If there is no niche for your business, you are unlikely to succeed. Look for unmet needs and plan to fulfill them.
Decide on your company structure. With a family business, it is particularly important to be sure that you know the chain of command. It can be difficult to decide who is responsible for which tasks and who is in charge. Older family members or parents may interject themselves into the chain of command, expecting that their directives will be followed due to their position of authority in the family. This can cause personal problems with your family members. Try to adhere to the chain of command as much as possible.
Clearly lay out what you will be selling or the service you will offer. Having an unfocused business plan will lead to trouble.
Funding Your Business
Decide whether you will be using outside financing or family money as seed money for your business. The person who is signing for the loan is legally responsible for the repayment. If family members are providing the seed money themselves, they may feel that they have more of a say in how the company is run. As long as you set up your company structure in a way that makes sense, you can give more authority to family members who have funded the enterprise. It’s important to make sure that family members understand who controls the purse strings.
Working with Family Members
Workplace dynamics can be negatively affected by family problems. People will often carry over resentments from family life and let them impact their daily work. It is best for all family members in the business to try to separate their work life from their personal interactions. This can be a difficult standard to meet, but if everyone is trying, the course of business will be made much smoother.
There will be lean years at the beginning of your business enterprise. Most new businesses do not show a profit for two years or more. This may be frustrating to some family members who are less experienced in the business world, and they may expect to take more money out of the business than it can afford. By reinvesting your initial profits back into the business, it will make for the best results.
Your business may not be able to support all your family members at the beginning. Make sure that non-essential members of the family keep their day jobs until the business is on a secure financial footing.
Hire Outside the Family
Don’t rely on family members for your entire staff. Hiring people with experience in your field is a smart idea for several reasons if you wish for greater levels of success. Having outside employees will help your business be more serious in and outside of its field.
Start Your Business Wisely
When you follow these tips, you will be able to create a family business that will bring both profit and employment to family members far into the future. The most important principle is to put family first. Don’t let business disagreements ruin your relationships with your loved ones. New England Paving encourages prospective family business owners to create solid plans and follow through with them for success.