8 Rules for Maintaining Harmony in a Family-Owned Startup

By Ryan Currie, an Overdrive contributor, and product manager of BizShark

Trying to manage a family business is tough enough without the added pressures of startup troubles. Whether you’re launching an app with your brother, trying to get a bakery off the ground with your husband, or are even working with lots of family members on a life-long business goal, a few rules can do everyone good.

Here are eight rules for maintaining harmony in a family-owned startup that might just help you avoid a total meltdown.

1. Assign everyone a role.
This is true for both family and non-family businesses, but when personal relationships are involved it’s crucial. It’s tempting to let everyone “pitch in where they can” and allow everyone domain over everything when a business is just getting off the ground but it’s a recipe for disaster once you start bringing in non-family employees. Everyone needs a role and specific responsibilities from day one.

2. Communicate. Communicate. Did we mention communicate?
Successful interpersonal relationships depend on open, honest communication, even when the subject is a touchy one, and nowhere is that more true than in family business. It’s smart to set up a weekly meeting where everything from suggestions to concerns to grievances can be hashed out and if necessary, family counseling from time to time to help moderate issues that inevitably arise.

3. Treat every employee equally.
This seems so obvious but it’s really hard to adhere to! You’ve got to have the same set of standards for every employee; if your cousin Jimmy is late three days in a week and you’d fire a non-family member for the same offense, Jimmy has to go. The second preferences are detected your employees will start to pull away and likewise, your family members will start to take advantage.

4. Don’t milk the business for non-business related tasks.
So your sister’s in IT and she’s on the business payroll? Why not have her come over during business hours to fix your home computer…you sometimes work from home! Nope. Business resources are business resources whether they’re family or not and it’s imperative you draw a hard line from the get-go between personal use and business.

5. Adhere to a hierarchy.
Along the lines of doling out responsibilities, realize that every business needs a hierarchy. At the end of the day, someone has to be in charge, someone has to be second-in-command, and so on. Setting up a family-run business this way will help alleviate awkwardness when the time comes to make tough decisions and no one wants to play favorites.

6. Have an onboarding plan for family members
Don’t let family members assume they’re welcome in the family business simply because they’re, well, family. Maybe you set up rules regarding related experience requirements or maybe you only let family with bachelor degrees take on management roles within the company. Be sure these rules are applied across the board and never, ever apologize for being reluctant to dilute the talent pool within the business simply because your brother’s totally useless kid needs a summer job. You’re a business, not a training ground.

7. Get a lawyer to draw up succession plans.
From day one, everyone needs to be on the same page about the future of the business. Is the goal to create a lasting company that can be passed on from generation to generation? Or do you want to grow something so big you can sell and cash out in ten years? A lawyer can help draw up contracts and deals regarding each individual’s investment in the company.

8. Know when to turn business off and family on.
Particularly in the case of husband and wife teams, it can be tough to maintain harmony when business is always hanging over your head. Set some ground rules for leaving work at work – maybe everyone turns off their phones/laptops after 7 p.m., or maybe you have family events once a month where any talk of business is forbidden. Make time for family life outside of business or you’ll ultimately implode.

Starting a business with your family members can be the best or the worst decision you’ve ever made. It’s all about planning and laying a foundation for a successful company before things start to take off, and knowing when to treat family like family.

Categories: FINANCES Guest contributors LEADERSHIP


One Response to “ 8 Rules for Maintaining Harmony in a Family-Owned Startup ”

  1. 3 Ring Binders on

    Kind of funny because my first job was working for a marina owned/runned by a family of 7. You really can’t remove any of these 8 steps from the process or things can fall apart REALLY easily.

    For the most part, they had it figured out well, but #2 and #5 stick out as super important.


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