Are you interested in setting up a family-based business? Some of the most successful small and large enterprises in the world began as family-operated concerns and later branched out into publicly owned firms. Others, like one of the largest candy makers of all time, are still privately held and began as a family business nearly 100 years ago. What’s the trick to making this unusual form of commerce work? Of course, there are some built-in pitfalls, like the fact that heated arguments can interfere with daily operations, divorces can break companies apart, and children don’t always like the idea of following in parents’ footsteps.
There are also plenty of advantages, the main one being that you’re working with people you know well and trust completely. In fact, many small companies made up of husbands, wives, and children operate smoothly and quite profitably for this very reason. What should you do if you want to create a startup venture with a spouse, parent, sibling, child, or cousin? Here are four pointers that can help make the enterprise successful.
Choose a Viable Niche
Not every kind of business lends itself to being run by members of the same family. For example, large manufacturing concerns typically are not ideal choices. Smaller, service-oriented companies tend to work well for startups, as do sellers of clothing, groceries, cosmetics, and any number of e-commerce enterprises. Choosing the right niche is an important first step, so spend time going over the possibilities with everyone involved. Don’t be afraid to try different approaches and begin again if the first selection doesn’t feel right.
Get the Right Kind of Life Insurance
As company founders age, they often need long-term medical or nursing care. It’s a major expense, and if there’s no insurance coverage, the cost can mean having to shut down a family-owned business. Fortunately, it’s possible to add long-term care coverage to many life insurance policies. If you aren’t sure how these policies work or what they cost, the best way to begin is to review an online guide on the pros and cons of this kind of coverage. There’s no reason to let long-term care costs bankrupt a family-operated company. Find out how you can get the right kind of insurance protection to keep costs in check.
Use the Outside Experience Rule
Many families have found long-term success by implementing a rule about outside experience. For instance, if you run a husband-and-wife law firm and have kids in law school, consider having them work somewhere else for a few years before they come into the family business. This rule gives grown children a chance to get a taste of how other companies operate. Learning the importance of project management, customer service, and general employee best practices without familial strings will help kids develop their own professional identity prior to joining the family business.
Use Objective Advisors
It’s easy to fall into a family think mentality when faced with day-to-day challenges. That’s why it’s so important to hire outside consultants at crucial times, like when deciding whether to expand, to take on new employees, or to acquire property. An unrelated consultant can offer a totally objective, non-family perspective that might not have been on your radar.