Council Post: Do’s And Don’ts Of Working With Family In Your Business

Sean Manning is CEO and Founder of Payroll Vault Franchising LLC, as well as a CPA, and Thought Leader in the Financial Field.

Small business is personal.

There are so many sacrifices that small-business owners make to capture success. From the financial investment to the time and effort spent growing your idea into a reality, it is no surprise that small businesses typically become a point of pride. Often, they become a part of your identity.

For many small-business owners, that leads to the idea of keeping the company running by those you trust most: your family. Whether bringing a sibling or a spouse into the fold as the company grows or handing it off for a child to carry into the future, the idea of keeping one of your life’s biggest accomplishments in the family is often appealing.

But to do so successfully, as with any other aspect of a business, it must be done right. I learned this firsthand when I shifted careers in 1990 and became employed at my father’s CPA firm. It was this experience, being treated fairly and part of the team, that really allowed me to build my experiences and resume at the firm, eventually purchasing it from my father in 1998. We found a way to manage every phase of our working relationship in a respectful way that allowed us to maintain a very strong personal relationship both inside and outside the firm.

If you plan to involve family in your own business, here are some do’s and don’ts to keep everyone on the path to success.

Do: Establish a plan.

When thinking about bringing family members into your business, there can be a tendency to jump into the situation without considering the ramifications. Family involvement can bring about some major changes, so it’s best to be prepared. Think about how you’ll welcome those family members into the business. What responsibilities will they be given to start? Will they need to work their way up like other employees? How will you introduce them?

Don’t: Play favorites.

Similarly, some of the biggest risks in working with family involve differences in how they are treated compared to other employees. If a relative has the same job as another employee, they should be held to the same standards that the role requires. If not, you run the risk of creating a divide among the staff.

This extends to the hiring process as well. There is no inherent issue with bringing a family member onto your team. However, they should be subject to similar interview scrutiny and onboarding as the rest of the staff.

Do: Document correctly.

It can be easy to fall into verbal agreements when working with family. If they’re working and on payroll, they need to be performing the assigned tasks and have the same legal documentation as anyone else. This is just as important, if not more important, for businesses founded together as a family. Not only does this protect the company from any issues with misclassifications, but it also ensures that everyone is on the same page regarding responsibilities, payment and general expectations.

Don’t: Blur the lines.

For the sake of both the business and the family, drawing a clear distinction between those two environments is essential to maintaining success. One of the tougher aspects of introducing family into your business is compartmentalizing personal and professional situations. Be wary of letting personal feelings affect the necessary objectivity in decision making. Make an effort to have personal time when business is not a part of the conversation.

Do: Communicate truthfully.

In any business, it is essential to have everyone on the same page. That is even more necessary when your family is involved. Communication is one of the best remedies to the possibility of confusion among the workforce, and it is invaluable for the family as well. If there is a plan for a promotion — or even one of succession — it is helpful to be open and honest with all parties. That way, you can make the best-informed decisions and promote understanding throughout the company and your family.

Don’t: Take shortcuts.

Instead, think long-term.

You are in it for the long haul. Building a legacy while working with family can introduce some situations that affect your emotions in the moment, but you wouldn’t want to jeopardize the company’s lasting success.

For example, if you plan to put family members in leadership positions, ensure they are properly prepared to meet the responsibilities rather than rushing toward a change they may not be ready to make. That strengthens the path toward success for both family members and the business.

Family is important. But in the end, the business you have built and on which your family depends will only be strengthened if you stay objective and think of what truly gets everyone to the end goal.


Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?


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