Most family businesses start small, and are run without a lot of formality
Things go along for years without much in the way of any written rules, or procedures.
People often suggest “professionalizing” a family business, but what exactly does that mean?
Well, here are 5 ways:
- Educate the Next Generation
The education level of the next generation of family members is a great place to start
If your children have the ability to go university and get a degree, that’s a plus.
If they can do that, AND get a few years of experience, working for another business, that’s better.
When people hire their kids right out of high school, or even college, it can really limit their future, AND the company’s, too
- Hire Non-Family Employees
The quickest way to professionalize any business is to hire people who are “professional”.
Bring in outsiders who are MORE professional than the people you already have.
Then, treat them professionally, listen to their ideas, and learn from them.
You can only go so far, without great non-family people on your team.
- Upgrade your Professional Advisors
Every business has outside professionals, like accountants and lawyers.
But in the early days, they usually used friends, or whoever they could afford.
As business grows, sometimes you need to move up the ranks, and switch to professionals who are at the level you need now.
It’s not uncommon to outgrow your advisors, and an upgrade can be needed.
It’s not always easy to cut these ties, but can be necessary.
- Have a Real HR Department
Your business can only grow as quickly as the ability of your people to grow along with it.
It all comes down to the attitude of realizing how important humans are to your company, as a resource.
A real HR department wouldn’t let you hire a family member and put them in a role they aren’t qualified for.
Having great people filling key roles is a must for every business.
- Create a Board of Advisors
Most family businesses don’t want a true Board of Directors
But why not start small and informally, with a board of advisors?
The outside perspective alone is worth it, even if it’s only to help you look at your own family members more objectively.
Bringing in independent advisors can be the single biggest step to professionalizing your family business.
Just ask anyone who’s done it.
That’s it for today, I hope you got something worthwhile.
See you next time.