HOW TO START FAMILY BUSINESS Blue Background

How to Start a Small Family Run Business

Do you have a wonderful business idea which you want to put to good money-making use? Wouldn't it be great to work with people you already know, like and respect? Well, who better to deserve your trust than your own family? To help get you started, here are some of our top tips for setting up a family business.

Decision making

The first thing you should consider is that running a business requires decision making and decision taking. Depending on personal relationships within your family, only you can be the best judge on who will be best at making and executing decisions. So our first tip is, before speaking to your family about job roles, sit down and write a list of strengths and weaknesses of your family members’ business know-how. Perhaps your uncle likes to have everything done his way, or maybe your daughter prefers to voice her opinion rather making decisions. By writing these attributes down, you can compare who will be best in which role, and harness their individual strengths to best suit your family company.

Designate roles

Another great tip from family business owners is to designate roles early on. Whether you’re starting a restaurant, bed & breakfast, or any other type of company, it’s important to give family members who are good at making decisions the “final say” in areas such as supplies, hygiene or advertising. Although this can seem daunting at first, building trust within a new company early on will set a great tone for your future. Whether you’re setting up a family run restaurant, hotel or maybe even laundry business, giving those family members who are good at taking final decisions final say in different areas, such as supplies, hygiene or advertising will create a great family dynamic in which ideas are able to thrive!

That said, we recommend care is taken with role designation, as not giving enough thought to this key area may lead to family tensions in the future. You could try and create a ‘trial period’ where your family members change roles every few weeks upon starting your business. This will allow you to find out more practically what skills your family members have or are more comfortable with. Perhaps your aunt has a secret forte for accounting, or your son has amazing customer service skills. You won’t find out unless you give them the opportunity to shine!

Initial investment

In many cases, running a small business with the help of your family is a way to pool savings to raise the initial investment or capital needed to launch your business. Collecting funds from family members is an alternative to taking out loans from banks or other entities. Banks will require you to pay some form of interest, while your family can be more flexible. With your family invested in the business, they will also likely have the best interests of the business management at heart. However, as mentioned before, it is good to ensure the roles are laid out clearly for everyone involved to minimise potential tensions and disagreements later on.

How to work with your family

Set up some ground rules between yourself and your relatives. Make sure before any money is invested in your business that everyone understands what they are getting into. Arguments between family members may happen once in a while, but as long as everyone is clear on the direction of your business, you should all be on the same path to success. If everyone remembers to think of the good of the business and customers from the very beginning, you will create a great working dynamic and environment for you and your family! Remember that satisfied partners and staff will help make more satisfied customers! Some businesses believe that the best way to keep family relations happy is to spend time doing things together outside of business hours; for example, getting away from the premises for one day a week. You could try to set up a regular time to meet and relax once a week, perhaps at a restaurant, in a park or play a sport like tennis together. Enjoying quality time will create a good dynamic between your family members and help calm down tensions which may have risen during the week.

Money

Many successful family businesses advise that the key is to separate money from the business. This can be helped by hiring an accountant and making one family member have the ‘final say’ on financial matters. This is very important in setting up a successful family business because it establishes a hierarchy as well as boundaries. Of course, you all want the best for the business, but sometimes buying the most expensive products will set you back in your business plan, rather than getting you further along it. Many of the most successful family businesses report that the key is to separate money from the business.            

Reputation management

Creating the image of your family-run business should be a decision taken by, or at least agreed upon by, every family member involved in the management of your business. Keeping everyone on the same page and working towards the same goal can help reputation and ratings soar from the very beginning.

Remember, it’s never too late to raise your ratings, and dedicated reputation management can help to sculpt the perfect profile of your business. One idea for running this part of your business is handing over reputation management to the youngest members of their family.

Younger family members tend to have more experience in social networking and will find new interesting avenues to advertise through naturally. You could try running the online profile of your business through social media and other free digital platforms. Image control and reputation management can make a huge difference to your business, so try giving these members of your team incentives to work hard.

Read our article on how to create a unique guest experience and your reputation will start to grow beautifully from the very beginning!
These are some of our top tips for setting up a family business. Make sure you continue educating yourself to increase your chances of hitting it big in the world of reputation and ratings, with great customer satisfaction to boot!

There are lots of great online and offline resources that you can consider before you make the big leap into the business world, so don’t forget, you’re not on your own.
Good luck!

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