Steps for Maintaining a Thriving Family Business
By Saghir Aslam
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities.)
“In a family business, every decision and policy has to be evaluated based both on how it works for the business and also how it will affect the family dynamic—and that adds an extra dimension.” Here are six steps you can take to ensure your family business is positioned to thrive and survive:
Put people in job based on ability. It’s best to hire when you have a business need for a position, not because a family member needs a job. Then choose the candidate whose talents, not lineage, best fit the job. “The most successful family business owners are very honest about the talents of their family members. The oldest child may be better fit in a sales role rather than CEO. Or may be a child is better off being an artist and not affiliated with the business at all.” Sometimes recruiting talent from outside the company is the best way to fill a job.
Clarify and define job responsibilities. Family firms tend to be more informal than other companies, and that can lead to misunderstandings about expectation. Take the time to more formal job descriptions that detail each employee’s responsibilities and goals, and establish regular reviews. The older generation should also refrain from micromanaging. “Parents tends to constantly second-guess what a child is doing, and then the child never feels like he is actually contributing.” You need to think, if they weren’t a family member, how would be I be handling this situation?’ And that’s how you should handle it.”
Leave work at the office; leave your personal life at home. Try not to talk shop during family gathering, especially at holidays, weddings, and other special events. And refrain from bringing personal drama into the office.
Groom the next generation. Invest in education and experience for young family members, sending them to industry conferences and getting them training to develop a skill the business can use. Encouraging them to work elsewhere before joining the family firm to establish themselves as employees and giving them an opportunity to mature and make mistakes outside the business. Having the next generation develop a solid background in business may help secure you investment as you pass it on.
Outline your succession plan. Passing a family business on the next generation can be tricky, and that’s why it’s important to have a strong succession plan. “It should start with how you define success: Is it keeping the business as a family entity over many generations, or are you comfortable selling it another firm with more resources that could built it into something better?”
You will also need to consider how to pass along ownership in a tax-efficient manner, how company founders will be taken care of in retirement, how the business may be a part of your personal retirement plan.
Know when to seek outside help. Many business owners consult with outside estate and financial planning experts to help with succession planning. But a disinterested third party can also help resolve disputes and look at the business rationally because there is no emotional attachment.
The secret to maintain a thriving family business is to involve your children at an early age and the best way to accomplish this is to not ask them to get involved or to tell them that we have a good business you should get involved. Let them do what they are doing, help them study in college and university whatever they want to study always share with them some information about the family business but never in a way hint to them that they should be part of this business. You should always talk to them, discuss with them even if it’s a boy or girl. Sweetheart I love you truly and I want you to chose the field that you love best. Take them out on a special lunch or dinner to their favorite place, not yours but theirs. Take only one child at a time and listen to him or her what their desire is. Give them a chance to talk, let them speak and remember most of the evening is their evening. You want to listen to them and pay attention. If you want to ask any questions be very careful that it doesn’t show them that you want them to run the family business. You continue this kind of meeting a few times a year right from high school days to the end of college or university of their choice and there are very few chances that they will come to you and ask you that they want to get involved in a limited way maybe a part time job but remember even though they are working in the family business don’t assume that they are going to run the family business. Continue your conversations saying, “Sweetheart I want you to do what you think is best for you. I think you will have a more that 95% success inshAllah.”
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)