How To Start A Family Owned Business
Building a family business is one of the great legacies that a parent can leave their children. A successful family business has competitive advantages that no other business can match. Family businesses are resilient and more likely to succeed than other businesses. Not only that, working together for a collective end can bring families even closer. There are so many reasons to start a family business. In this article, I will explain just what you need to do to get started.
Conduct a Talent Assessment
One of the pitfalls of family businesses is that family members are placed in roles that they are unsuited for, simply because of their DNA. The solution to this is to be as objective as possible and assess each family member’s skills set. Pre-employment talent assessment is not new. A 2019 LinkedIn report, found that 57% of recruiters use soft skills assessments, and that 60% of recruiters believe that such assessments will prove valuable over the next five or so years.
You need to assess what each family member can and if they fit into the values of the company that you want to create. Using pre-employment talent assessment tools will help you arrive at the most rational assessment of everyone’s strengths. It will also highlight where you will have to go outside of the family if certain necessary skills are lacking.
Assess the Risk Involved
At this juncture, you need to have a frank talk with everyone involved about the risks inherent in your business. By risk, I mean, not simply the probability of performing below expectations, but the probability of losing invested capital. If anyone goes in without considering these risks, when the company enters choppy waters, they will not be able to bear the stress. The nature of the business must be in harmony with everyone’s attitude towards risk.
Determine if the Family Dynamics Are Healthy
As wonderful as it is to have a family business, you should not treat a business as a platform to resolve problems in a family. Rather than healing your family, a business will magnify any dysfunction in your family and lead to failure. You need to ensure that the family is able to work well together and that there are no latent conflicts and resentments that could threaten the success of the family business. A family business is not built on perfect families, but it is built on healthy ones.
A lot of sacrifices will be demanded of everyone involved. Many challenges will have to be surmounted. There may even be a decline in living standards while the company takes off. Business is incredibly demanding in terms of time. Everyone has to be prepared for these challenges and the sacrifices they will have to make. Otherwise, the whole thing will collapse.
You should only proceed if everyone is on board and they are filled with enthusiasm for the project and its goals. More than any other business model, harmony is very important to a family business. Nobody should be in this from a sense of duty. They must be in this because they love the idea.