Family-owned businesses form a major portion of new businesses launched every year. Some might even say that it’s the backbone of any countries economy.
Starting a business with a member of the family—be it your spouse, parents, siblings, children, or other family members—presents some unique challenges over the usual hassles of encounters posed by a start-up company or an established business. Basically, striking the right balance is the key when starting a family business. If your family is involved in your business or startup venture, you should be clear in the beginning about certain important things like compensation, power of attorney, exit plans, and other details—however uncomfortable they might seem to be—before they become a problem.
What is an Innovative Approach in a Business?
Innovation is significant in any kind of business. Basically, innovation means ideating and introducing something new to your business. This could involve any of the following:
- Tweaking or making changes to your business processes to help increase productivity and efficiency.
- Extending the range of your existing products or services.
- Improving your existing products and services
- Developing an entirely new line of products and services keeping in mind the rapidly changing consumer base, demands, or needs.
- Adding value to your products and services to differentiate your business from its competitors.
Innovation can mean a single breakthrough— bringing a revolution in a business-like creating a totally new product or service catering to a specific niche—or it can also be a series of small changes brought over time. The following are 7 approaches to improve your family-owned businesses which would aid in improving family business performance.
Keep the lines of communication open: This is a no-brainer. Find innovative ways of keeping all lines of communication open. This could include having outdoor meetings in a coffee place kind of setting where an employee or partner who also happens to be your family member feel more at ease. Include all the family members who are involved in the business, without any regard to hierarchy as segregating a particular member might lead to animosity.
Set clear roles and responsibilities: Again, a no-brainer and very important when it comes to family business management. Create fliers and files as a way to keep your family members on track and define each member’s job responsibility in a clear, concise manner. This would help ensure that the business runs smoothly.
The dirty “F” –Financial aspects: The downfall of a family-owned business may well be garbled financial data. Designate a single point of contact to manage all aspects of finances smoothly. You could consider outsourcing it to a professional accountant who takes care of such things. You may consider this an unwanted expense or be tempted to do it on your own. However, it is better to have an expert on the scene to avoid any mess.
Set compensation terms in the beginning and keep it out of the way: It is never a good idea to promise a family member a certain compensation and fall back on your word. Keep everything in writing. Also, market-based compensation is essential. Avoid over-paying or under-paying.
Hire only those who are qualified: It is a basic tendency for people to hire an under-qualified person when it comes to the family business. This is a mistake. Innovate the hiring process—for instance, give a real-life problem to solve and see if this approach leads to better hires.
Give appropriate training: Many family-owned businesses tend to take this is a waste of expense or time or both. Do not make this mistake as this may cost your business. Give all your employees proper and regular training to keep them on top of things. This will only lead to better family business management.
Planning for the Future: Succession planning is probably one of the most important things as well as a complex issue that should be discussed right at the beginning—for any kind of business. It can be a very emotional issue filled with discomfort, especially for family-owned businesses. There needs to be a defined pathway in order for a smooth transition to take place.
Introducing innovation in your business can help you to improve productivity, cut costs, keep up with the competition, build brand value, and establish new partnerships that are beneficial to your business. This will only lead to an increase in turnover and improve profitability.
Innovation is an ever-evolving creative process. Don’t shy away from asking your family members from inside your business for ideas! Another way to improve your family business through an innovative approach is to study the market well, catch up on media reports, and keep on top of technology. We can help you do that! Contact Ourbusinessladder today.