NRHA Monthly Program Communication – November 2014
Five Strategies to Ensure Family Business Success
Many of the strategies that family businesses use for success are applicable to success for any business. Non-family businesses can learn a lot from family businesses.
These are the top five success strategies for family businesses (that to apply to all businesses):
- Keep the lines of communication open. Schedule regular meetings to discuss issues of concern and topics such as business transition, business performance, and responsibilities. Include all of the family members, no matter where in the hierarchy their jobs fall – exclusion creates animosity. Create a manual that lays out the ground rules for how the meetings will take place to ensure everyone gets a chance to be heard and there are no impediments to communication.
- Assign clear roles and responsibilities. As a family member, it is natural to feel that everything is "my" business. However, not everything is every family member’s responsibility. Job definitions prevent everyone from jumping in to tackle the same problem and help ensure that everyone knows their role, which makes the business run smoothly.
- Keep good financial data. The downfall of many small and family businesses is not having solid data. Have a single point of contact to manage the finances. If you’re small enough, you can rely on a family member. Otherwise, you’ll need to bring in a qualified accountant. You may cringe at the cost for this but the difference between good financial data and messy data is the difference between knowing exactly where you are on the road and trying to drive with a mud-covered windshield.
- Avoid overpaying family members. Market-based compensation is fundamental and essential. Look on the internet for the pay scale of someone in a similar role to get an idea of market value. Parents in family businesses tend to overpay the next generation, or pay everyone equally despite differing levels of responsibility. Both are bad practices. The longer unfair compensation practices continue, the harder it will be to clean up when it blows up.
- Don’t hire relatives if they’re unqualified. Competence is essential. Family businesses are a conundrum: The family aspect generates unqualified love, while the business side cares about profits. Therefore, family members may be hired even though they’re not qualified. The remedy is to get them trained, move them to a role that matches their skills, or to have them leave.
The goal of the North American Retail Hardware Association is to help independent hardware and home improvement retailers become better and more profitable merchants through a wide array of educational and training programs, financial management resources, and human resource tools that are all available online. WRLA members get unlimited access to a full range of training and management services when they join NRHA through the WRLA.
Visit the WRLA website at www.wrla.org or click here for more information about NRHA.