How to Effectively Build a Family Business

Check out this recent article from StartupNation on how to master the intricacies of starting a family business:

Every business hires employees based on some mixture of the candidate’s competency and how good/bad the relationship is with the candidate. Unfortunately, in a family business the default or predominant method of hiring is relationship. While the intentions are good, there is not only an increase in the usual business risk, but also a risk of damaging family relationships.
Three Common Pitfalls When Hiring Family

Pay
How harmful can it be to pay your own flesh and blood an “overly generous” salary? So what if he would only make half as much on the outside? The temptation is great to provide family a salary they would never make on the outside.

Performance
Sooner or later, the competent non-family staff get the message: relationship trumps performance. Sadly the same “job metrics” that are applied to the non-family employees are not applied to family. The result: sooner or later the good ones leave, recognizing that the playing field is not level and advancement potential is limited.

Benefits
Company cars, loans, expense reports that lack accountability, company AMEXs, business trips that morph into pleasure trips, etc., etc. soon become part of this seduction. The non-family staff frowns on the tendency of the owner to hand out unjustified and profit-killing benefits.

Times does fly and now at fifty years old, it is common for the family employee to have serious addiction issues, divorce, loss of self esteem, etc. Even if they hate their job, they will stay. Many times they are a “cancer” in the company as they become an employee relations and morale nightmare. They feel stuck and hopeless about ever finding a job on the outside. They often bury their “true career passion” and live with the constant anxiety of having no recourse if they ever lose their job.

Click here to read the original article.

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