The average working American spends at least 40 hours or more a week at work with their co-workers and bosses and the rest of their time with their family or loved ones. If your co-workers and boss are part of your family, this changes everything but can certainly have advantages. Some people merge both family and work by starting a family business. Nearly 70 percent of small business owners in the U.S. are family owned or are working their business with family members, in one-way or another.
Running a family business has its perks, after all, you probably are already familiar with each other’s personality and work ethic. On the other hand, mixing work and family may create a headache for you, but here are some helpful tips to help you keep a level head when running a family business.
Get a contract. You may like to believe that blood is thicker than water, but in the grand scheme of things, a contract is always best, even when dealing with family. A contract helps set clear communication, outline duties, and sets expectations. In your contract, you may even want to include any necessary non-disclosure agreements, an employee guide or handbook, and make certain to include company policies. Yes, even your family needs to abide by the rules, no exceptions!
Always have an exit strategy. Sometimes, the dynamics of your business or family obligations change. It is for this reason that an exit strategy should be on your priority list. Make a way, for anyone who is invested, the opportunity to sell or offer a buy-out option. This allows your family of investors a way to exit their financial obligation in an agreed upon manner, which hopefully avoids any hard feelings.
We also encourage you to decide on how you want to leave a legacy and set up a plan for the future of your business. If you are the CEO, what will happen to your family business in your absence, especially when you retire or if you pass away? It is important to protect your shareholders and have a succession plan for who will run the family business once you are out of the picture. In this decision you should also weigh-in the aspect of life insurance and disability to protect your family, should the unthinkable happen to you.
These tips are ideal for anyone involved in a family business. If you would like assistance in the planning of contracts, an exit strategy, or succession plan for your business, please contact Yancy Belcher, Attorney at Law. We offer legal advice regarding many aspects of life, including family business. We welcome clients of Mt. Juliet, Hermitage, and Lebanon, Tennessee.