Family Business accounts for more than 80 percent of US businesses, contribute 50 percent of our Gross National Product and supply half of our workforce. However, only about 10 percent of family businesses make it to the next generation as a result of the unique challenges family businesses encounter. There are certain advantages to starting a family venture: – Initial expenses and losses can easily be shared.
– Afterward, success benefits the household as a whole.
– It enables the family to be together.
– The family may trust each other over outsiders. But, there are many challenges that come up during a startup venture that needs to be addressed: Tips for Spouses jointly running and starting a business:
— Practice business rules; love is for non-business hours.
— Keep business and personal life separate- comprehend the inherent conflicts of interest.
— Establish strong ground rules and understand you won’t necessarily agree.
– Involve young relatives in the business for fun, short jobs and tasks.
– Have a system for recognizing and rewarding hard work and achievements of the household.
– Know what the business relationships of Family are.
– Have a Good Business Plan that clearly defines the business structure, responsibilities, roles, strategic direction, etc.
– Identify the strengths and weaknesses of each relative.
– Know each family individual’s business experience and history.
– Agree on upfront on how equity is going to be divided.
– where and how non-family will be integrated into the venture. Should You Join an Early Stage Family Venture… Benefits for household persons joining a new family venture are numerous:
– Family can help and are affordable throughout the development period.
– The family wants the chance to assist the business as it benefits the household as a whole.
– Flexible hours and the cover are appealing to family members initially, with minimal resources.
– The business brings the family back together.
– Family members join the family enterprise since they’re frustrated with their current workplace and environment. Issues to consider for an early phase family Venture:
– Resentment can build if a relative is not adequately challenged and rewarded.
– Problems concerning power, competition, and jealousy are common between relatives.
– Take into consideration a family member’s personal interest, skills, expertise, and training when assigning areas of responsibility.
– Restrict, exactly, every family member’s area of responsibility.
– Define who every family member is accountable to, in addition to, for.
– Determine payment arrangements – salary, bonus and equity stakes.
– What will be done if a household isn’t contributing?
– If a relative wants out, what’s the buyout program and continuation program?