Taking Care of the Family Business

Care of Business

A family business operates similarly to any other small firm. There are, however, some challenges that are unique to running a family business.


The following are some of the most typical issues that can arise in a family-owned business:


Arguments about day-to-day operations

Differences of opinion on how to divide and spend the company's profits

Non-family employees have a high turnover rate.


Different points of view do not always lead to conflict, but emotional bonds between family members can make it difficult to make objective decisions.


Here are some ideas for resolving family conflict at the workplace:

deciding on a procedure for resolving conflicts before they arise

Using the services of a mediator



If a family member is in control of operations, he or she should be able to negotiate among family members in order to make the greatest business decisions. In some circumstances, appointing a manager who is not a family member can help you establish more objective control and oversight in a family-owned business.


With any approach, all employees' duties and obligations, including those of family members, should be explicit, as should the manager's power to suspend or terminate any employee who breaks company standards. In a family business, fairness is critical, and management will be ineffective if special considerations are provided.



Succession planning is an important issue to consider for any small business. Consider who will take over if something happens to the family member who owns or manages the business. A strong succession plan can guide your business through a change in management, and can help you avoid conflict.



The pressure to recruit a relative is one of the most typical concerns in a family business. It can be tough to decline a request because of the emotional nature of family relationships. Make decisions based on the best interests of the company, not on personal feelings.


If you hire a family member, it should not impair your working relationship with the rest of your team. Maintain the same high standards for relatives as for non-family employees.


When presenting new ideas for business improvement, particularly where spending is involved, base your information on facts to provide an objective perspective of what is best for the company. Family members can then make an informed decision based on concrete information.

You can also hire a business advisor. Relatives will sometimes accept the credibility of advisors - such as bankers, accountants or lawyers - when they won't accept your judgment.

Paid consultants can also help confirm the value of expenditures for the business, and can devote additional time and effort to specialized projects that could require further research.



Paying family members and dividing profits among them can be a difficult task. Many people feel that they are underpaid, but what do you do when relatives are unhappy with their share of the profits?

If the business is a small corporation, certain equalizing factors can be accomplished by using stock dividends, or recapitalizing the company.

Providing competitive salaries is another way to ensure that profits are being divided fairly. Find out what local salary ranges are for various jobs and use these ranges as a guide for paying both family and non-family personnel.

Benefits like deferred profit sharing plans, pension plans, and insurance programs can also be used to divide profit. Providing benefits can satisfy family members and help them build their personal assets.

After you decide on a method for dividing your business profits you may want to consider writing it in a formal agreement. The document will help:

  • record what was decided 

  • set expectations

  • make the process easier in the future   



Non-family staff in some family-owned businesses have a high rate of turnover. Exit interviews allow departing employees to explain why they're leaving, which can help you figure out why there's so much turnover. You may take efforts to address the issues that affect turnover once you know what they are.


Remember that having a successful family business necessitates treating it as a business.


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