The opportunity of starting a business with one of your family members or contributing to an already existing business, and creating a work environment to enlarge and expand this business, can be a great and successful idea. However, there are many factors that should be considered before starting since disagreements and differences in opinions and points of view are likely to happen even among the members of the same family.
One of the greatest advantages of having a family business is stability and unity. After all, you’ll work for the best interest of everyone, and you will all share the same responsibilities towards the business, its success, growth, and affluence. In other words, you’re all working to achieve a unified goal. Like any other thing that matters in life, family businesses have their own pros and cons. Many times, things can be really complex and challenging. Read through our article to know if your family is ready to start a business together.
Implement a Business Plan
Considering having a family business can be positive thinking, especially when reflecting on matters, such as income, tax breaks, hiring members of your own family, passing the business onto new generations, and most of all working with people you trust and can rely on. But before you start, you should understand that developing a business plan is a crucial element for business success. Consulting business advisers is a very important step to legalize and regulate your family business. Everything has to be documented and distributed, especially the roles of stakeholders in order to determine business goals and operations. A business plan should include clear and definite roles of all members, ownership stakes, compensation and profit distribution, and exit and succession plans.
Setting Ground Rules
In order to start a family business, there have to be rules and conditions to organize the work environment among the family members who are contributing to the business. Running the business in a smooth and professional way will determine the company culture and the process of managing and operating the work atmosphere. If at any point you realize that separating business from personal life is going to cause problems then you’re still not ready to carry on with the process, and it’s better to reconsider this step at least at this stage in your family’s lives. Keeping business away from home, family gatherings, and occasions is the only way to maintain good relations and respect. Some people can’t help discussing their opinions on business matters and might not know when the right place to do so is.
Company Formation Process
Choosing the right legal entity for your family business is one of the fundamentals to create business liability. This step requires a lot of legal advice and consultation in order to proceed with the company’s formation process. Professional service providers can assist you with filing articles, registration, documentation, compliance with federal rules, and operating agreements needed to form a family limited liability company. The UK-based agents at www.uniwide.co.uk believe that every company should be offered personalized solutions that meet the specific needs of their organizations, based on their business goals and objectives. Forming a liability company for your family’s business has many advantages; one of the desirable benefits is the protection of family assets, personal properties, and partnership flexibility.
Long Term Vision
If your intention is all about creating a legacy to be passed on to generations, your goal has to include a long-term vision. In other words, when starting a family business you must have a broad perspective on how this company is going to operate after two or three decades from now.
While corporations and enterprises work on a different scale since running the business doesn’t really depend on who is leading, family firms, on the other hand, can struggle to keep the business running if there isn’t a clear succession plan. Depending on the coming generations is not easy, especially if they’re not fully engaged in business details. Showing passion and commitment to their family’s business are the only ways to guarantee its success and continuity. Creating a vision statement can help successors in achieving future success and maintaining the existence of your legacy. Engraving the core values of your business will direct whoever will come to lead in the future.
Write a Formal Succession Plan
In long-term family businesses, the future leader can not be left to chance. We’ve seen many successful businesses struggling to survive after their founders’ retirement or death, this usually happens when the role of the successors or heirs is not stated in a succession plan or statement. A formal written succession plan is the key to the business’s stability and survival. When choosing a successor to your family business, you should consider potential members who are willing to work hard and align with the needs and goals of the business. As a founder, putting aside emotional influences and claiming the best interests of the family is a huge responsibility.
Professional Advice
Seeking professional advice is a crucial aspect of any business’s success. Consulting experts in your field will have a great impact on business progress since they are not influenced by any emotional effects or personal desires. The capabilities and experiences of members working in any organization should be the only derive to hiring them in leading positions. No one’s entirely perfect but there are people who have certain characteristics, skills, and talents that allow them to professionally run a business and achieve great accomplishments.
Starting any business comes with many challenges. While establishing a family business can be more complex, it has many benefits if it’s based on a proper business plan. Setting ground rules and a professional work environment are important aspects of a strong family foundation.
Choosing the best business model for your company has to be the first step to guaranteeing that all your business needs and goals are fulfilled. The roles of stakeholders must be clearly stated, documented, and communicated to all family members contributing to the business. Creating a business culture based on separating your personal life from work is a key factor to the success of the business and maintaining good and healthy family relations.
