Sooner or later, your family run business needs to expand.

Legal and safety considerations increase when adding new non-family team members.

As this journey continues, the likelihood of adding leadership positions is unavoidable.

Here some key areas family business owners should consider to avoid a painful transition from Mom and Pop to Corporation.

There comes a time when the original owners need to step back from leading day to day operations. They need to spend more time on growing the company or taking care of a family member. It is the time to make the right strategic decisions.

These young companies can have trouble adding new team members, ramping up production and outsourcing more of their in-house operations. While much of the attention is focused on succeeding with the team they started with, little attention is devoted to creating systems and structures new employees can use with ease.

Should one or two key employees leave, these young companies face significant setbacks. Few of their processes are documented and few employees are trained to fill in for their more experienced co-workers.

Its time to start your company’s transition and here are some ideas to get you started.

1) Your culture is your foundation. Can you explain it to other people in such a way they WANT to join your team?

What is your company’s culture? No doubt you value your employees, customers, suppliers and all those who helped you succeed. You likely treat your employees like friends, family and neighbors. Good fences make for great neighbors and good professional boundaries make a productive team. In your drive to succeed, what behaviors have you overlooked?

2) Do you have a mission and values statement to clarify your company’s purpose?

Your original mission was to survive one year to the next. What really embodies your team? Craft a vision and mission statement – it does not need to long – just a few sentences. One of my favorite examples is “Through these doors walk the most dedicated employees in the aerospace business.”

3) Have you written down the procedures you use in your day to day operations?

Document how and why your process works. Include photographs as well as videos – for seasoned employees, they are so familiar with the process they may not be aware of every step they take.

4) Hiring the right human resources representative?

The complexity of employment law can not be overstated. Employee contract, OSHA and EEOC compliance become more relevant and required as non-family members are added to your team. Due diligence is critical for the success of your business and your family’s financial well-being. 

It is also wise to formalize job descriptions and pay ranges. It makes it easier to recruit new team members and formalizes your expectations. New companies fight for survival and mature company fight to keep the team focused and performing their jobs. 

5) Have you established discipline procedures?

Document how and why your discipline process works. Many family run businesses may make exception for family member’s behaviors. Every time a family member steps out of line and nothing happens, more precedents are established. 

It is highly recommended that you establish professional codes of conduct, write down absentee policies as well as an employee handbook. A new supervisor needs to walk into a situation where your expectations are long established and documented. Significant conflicts occur when new leaders come in and are perceived to discipline the team unfairly. It may be they are the first to expect a disciplined team!

6) Have you established a training program?

Knowledge in the hands of a few is a recipe for disaster. People get sick, decide to move on or die. As a business owner, you cannot afford to not have knowledge shared between members of your team.

A training program is a great way to introduce new hires to your company as well as keep communication (and knowledge) flowing through the team. By encouraging more seasoned team members to mentor new hires, you can reduce expensive turnover.

7) Hiring the right sales team?

Your sales team is the front line for how your company’s reputation is perceived. You want them to review the benefits of your products and services without being pushy. Most business owners will still answer the phone themselves and have the best luck due to their knowledge and comfort with the people and the process. They automatically know how long it will take. All of this knowledge needs to be transferred to your new sales staff. Ethics are critical as well as not over promising or slamming the rest of the company with an unrealistic and potentially foolish request.

8) Hiring the right operations manager?

Turning over the reins to new operations manager is necessary for you to devote more time and energy. By establishing your culture, vision, mission and values, your job will be much easier. As tempting as it might be, serving as a part operations manager and part time CEO is a non-starter. You did that when your company was younger, now both are more than full time jobs.

9) Hiring the intellectual property attorney?

As non-family members are added, you need to worry about how to protect your intellectual property. You may not need to file patents but your trade secret should be protected. It is another case for great care and due diligence. Should your trade secrets find their way to a competitor, you will face steeper competition and may lose your business. 

10)Thoughts on hiring adult children or family members.

Many small business owners want to pass along their businesses to the next generation. Their children may work for them for a short time to help get the company off the ground. It is best your children and relatives have their own career paths independent of your company.

Your children need to learn how to earn trust and respect as well as how to lead when one parent is not the CEO. Few employees in their right mind will challenge the boss’ child. After spending 10 to 15 years working for others, your child’s knowledge and experience will pay huge dividends for your company. They will have professionally matured and grown. By denying them this critical step, you are stunting their growth and jeopardizing your and their future!

This is just the tip of the iceberg! There are many other considerations depending on your specific situation!

 

 

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