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The Success of the Family Owned and Operated Business

starting a Family business

Years back it used to be that many businesses were family owned and operated, but not so today.   Many of these have been replaced today by the big box stores.   However, there are still some of the family businesses around, and the big corporations should not deter a family from going into business provided they have done their homework and feel it is going to work.

Starting a family business often starts out as fun, but it can also cause some real rifts in the family which can be most unfortunate.   With some proper thinking and planning a lot of this can be avoided.

Define the roles:

What you really need to avoid in the family business is having too many chiefs. It is important that everyone’s role is clearly defined. This way everyone has their own responsibility for different segments of the business and there is no passing the buck if something goes wrong. Everyone should take on the role that is going to utilize their strengths. It is not fair to put a family member into a position in the company that he may be weak at. This is not good for the family business or the family partnership.

Keep the communication lines open:

It is really important that all the family members taking part in the business have the opportunity to express their opinions.   It should not be such that just because one member happens to be the youngest that he is not allowed to express his viewpoints or participate in the input.   The goal here is to separate business communication from family communication.  Business conversations should only take place in the business setting, and not become the topic of conversation around the Sunday family sit down dinner.

Dedication:

One of the biggest struggles that can take place between family members in the new business is how everyone perceives the dedication of the other family members.   One may be willing to spend 80 hours a week on the business, while another is only prepared to dedicate 40 hours.   This is where communication is going to play an important part.   The role the individual is taking on, plus their personal circumstances will have to be taken into account.

The outsiders:

There will probably come a time where employees outside of the family need to be brought in.   The family run business has to accept this.   It is highly important that the right atmosphere be present for these employees.   If they feel that only the family members count, then it will be most difficult to get the best out of the workers.  Fair play has got to be implemented.

Use an accountant for the financials:

Another big problem for the family run business is the financials and accounting.   It can be a touchy area.  Using a small business accountant to take care of the recording and tracking of the financials will give the business some stability and accountability when it comes to the money.

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Sam Seidman, CPA, CA, LPA
629 Sheppard Avenue West
Toronto, Ontario
M3H 2S3

Telephone: (416) 398-1700
Fax: (416) 398-6226

Chartered Professional Accountant, Chartered Accountant, Licensed Public Accountant

Email: sam@torontoaccountant.ca

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