Running a successful family business with non-family employees

family-business

Approximately 80% of all businesses in Canada are family-owned and operated. It’s a popular form of small business, but of course, not all of those businesses are solely staffed by family. In fact, family businesses often experience a high turnover rate of employees outside of the family.

How can your family business maintain its welcoming and inclusive dynamic and extend it to non-family employees as well? How can you avoid an “us vs them” environment? Here are some tips:

  • Make every employee – family or not – feel welcomed, appreciated, and part of the team. Happy employees who love what they do are more likely to band together.
  • All employees should pull their weight, but family employees might be watched a little more closely than others. Make sure that everyone is responsible, respectful, and does good work.
  • Avoid hiring family members who are unsuited to their role. This prevent you wasting time and money, and it’ll demonstrate that you don’t play favourites.
  • Don’t have different rules or expectations for family and non-family employees. Showing favouritism to family members or keeping them more in the loop than non-family employees will only breed resentment and damage morale.
  • Squash tensions before they arise. Make sure all employees know they can come to you with any issues, even if it’s a question about your cousin’s use of the best parking spots. Treat all issues with respect and sensitivity.

Visit GoForth Institute’s Entrepreneur Library for more tips on managing your family business!

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Does your family business have a succession plan?

family-business-successionNote: This post was originally published on May 9, 2015. We’ve updated it with more recent statistics from the PWC Family Business Survey.


According to the PWC 2016 Family Business Survey, 43% of Canada’s family-run businesses don’t have a succession plan in place, and only 12% of family businesses survive to the third generation. We think: yikes!

Why is a succession plan necessary?

We get it – if you plan on working in the business for the rest of your life, it’s hard to have the “after I’m gone” conversation with your family members. It makes people uncomfortable and it’s hard to talk about. However, it’s critically important to have a strong plan for who will take over the family business once your time is up. Otherwise, the business you’ve worked so hard to build could face major disruptions to customers and suppliers – and harm the business overall. It’s not enough to assume your eldest child or favourite niece will take over and run things the way you’d envisioned. A well thought-out plan, laid out on paper, will make things clear for everyone, all to the benefit of your family business.

How to create a succession plan for a family business

  • Start early. Most experts in the field of succession planning say that five to 10 years before your planned exit is not too early to get things started. The longer you can spend planning the succession, the smoother the transition will be. This long lead time gives the successor a chance to get knowledge and experience of the whole business, try their hand at leadership, develop their own relationships within and outside the business, and gain the trust of others who might be less than enthusiastic with the impending change of leadership.
  • Write down your vision for the business. Where is your business headed? What do you want it to achieve? What steps are necessary to get there? Remember that your business is a business first, and decisions must be made to ensure its success.
  • Come up with a shortlist of successors. Related to the first point, who has the skills and passion to lead the family business in the right direction? Is it your daughter with the list of ideas for e-commerce and social media marketing, or your nephew who wants to uphold tradition and keep the business the way it is? Analyze each candidate honestly to arrive at your decision. Try to keep your emotions out of it during this process (we know it can be hard!).
  • Keep an open mind. You may find that the best person to pass the torch to isn’t a family member at all – it happens! Remember, the goal is the success of the business. Family members may feel slighted over this, but keep the channels of communication open and remind them that they still have to all work together to keep things moving forward successfully.
  • Have a chat. Don’t work in a vacuum – involve your family in this process early. Get to know what people think of the whole situation, and what their own goals are. Making your intentions known about how and when you wish to exit the business gives family business members information on which to base their own career decisions.
  • Seek outside help. Formalize the succession plan by getting professionals such as lawyers and accountants involved. There may be legal or financial implications for you to consider when creating a succession plan for your family business. Poor succession planning is likely to be more costly than involving professional help.
  • Write it down. Make sure your succession plan is written out and detailed. Present this plan to the whole family so that everyone knows what’s supposed to happen and when. Having a well thought-out and communicated family business succession plan will help make the transition as smooth as possible.

For more on succession planning and exit strategies, read a previous blog post: What’s your out? Why an exit strategy is important.

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Molson – a Canadian family business success story

Note: This post was originally published on July 31, 2010. We’ve updated it with more recent statistics and information family-owned business and the Molson family.

At GoForth Institute, we love talking about family businesses. After all, about 80% of all firms in Canada are family-owned. Family-owned businesses are also responsible for approximately 60% of Canada’s GDP annually. That just goes to show how viable family businesses are in today’s entrepreneurial climate!

When you think of family-run business, do you picture the stereotypical “Mom and Pop operation,” with kids working weekends and evenings? Yes, many of Canada’s family-run small businesses are like this. But we wanted to share the story of a more prominent Canadian family-run business. Take some inspiration from the Molson family.

The Molson Brewery, the oldest brewery in North America, is a family-run business

Even if you’re a teetotaler, you’re probably familiar with Molson. Did you know that Molson Canada is the nation’s second-oldest business?

This family-run business was founded in Montreal in 1786, by John Molson. This original Molson arrived in Montreal just four years earlier from England. He wasn’t the only British expat in town, either, and he knew that his countrymen would be thirsty for good beer.

Molson’s beer was a hit right away. His entrepreneurial vision allowed him to craft a beer that was appreciated by workers and the upper class alike. Soon enough, his customer base was growing faster than he could produce beer.

It also did not take long before Molson became, as many entrepreneurs are, stretched too thin with other business commitments. His three sons began to take on a larger role within the family business.

In 2005, Molson merged with American company Coors – another family-run business – to form the Molson Coors Brewing Company. Seventh-generation Molson family members Andrew and Geoff serve on the company’s Board of Directors along with members of the Coors family, and non-family members hold other leadership positions. It is this balance between “insiders” and “outsiders” that can help a family-run business move forward on a strong, healthy foundation. A snag of family-run small businesses is the same as one of its perks: You get to work with your family. Giving yourself a little breathing room is always a good idea!

A family-run business that gives back to its community

The Molson family were not just known for their beer, however. Their entrepreneurial spirit shone through in other areas of the community as well. Among other things, the family was responsible for Montreal’s first library, the creation of what became the Bank of Montreal, the new Montreal General Hospital and was behind the creation of Canada’s first railway.

Lessons to be learned from the Molson family

Of course, we don’t expect your family-run small business to become the behemoth that Molson Canada is. We do think, though, that any family business can learn a thing or two from the Molsons. This family-run business found a niche in the marketplace, played an active role in the community and – most importantly – struck the right balance to stay together both as a family and as business partners.

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6 facts about Canadian family businesses

editorial-14Did you know these six facts about family businesses in Canada:

  • Approximately 80% of all businesses in Canada are family-owned
  • Family-owned businesses are responsible for about 60% of Canada’s GDP per year
  • Many of Canada’s largest and most well-known businesses are family-owned, including Bombardier and McCain Foods Limited
  • Molson Coors is the oldest family business in Canada
  • Only about 20% of Canadian family businesses have a strong succession plan
  • To keep the peace at the next family dinner, 88% of Canadian family businesses have a conflict-resolution strategy in place.

For more reading about family businesses, check out The perks and snags of family business, How to create a strong family business environment with non-family employees, and Does your family business have a succession plan?

Sources:
– E. Stavrou and P. Swiercz
– Globe and Mail
– PWC 2014 Family Business Survey
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The perks and snags of family business

Did you know that about 80% of all businesses in North America are family-owned and operated? And that family-owned businesses contribute to 50% to 70% of Canada’s annual GDP? So, chances are good you could run a family business one day, or at least entertain the idea. Here are some perks and snags of a family-run small business.

Family business perks

  • You can count on family – family relationships are networks of support, assistance and advice.
  • Families often have shared values, loyalty and commitment.
  • You’ve got access to a source of investment capital – “love money.”
  • The focus is on the long term, instead of on short-term profitability and the sale of the business.
  • Family businesses are more profitable and enjoy a longer life than non-family businesses.
  • Family members may be more willing to make financial sacrifices than non-family members, for the sake of the company.

Family business snags

  • Emotions can get in the way of business and your workplace may become a whole new location for dinner table arguments.
  • Many family businesses employ those who aren’t in the family. However, there is a high turnover rate of non-family member employees.
  • Growth can be a problem if some family members are unwilling to put profits back into the business.
  • Succession planning – finding the right person to take over – can be tricky. Emotions, pride and hesitation over discussing a relative’s eventual death may mean the business will eventually be left without a solid plan for the future.
  • Family business tends to spill over into family time, making it hard to ever get away from the business, or to stop thinking about it.
For more on family-owned small businesses, check out our article called Managing Your Family Business and Keeping Your Cool – any tips you’d like to share?

 

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