Family owned businesses often have a head start over other startups. Relatives already understand each other’s strengths, have longstanding emotional ties, and often share the same sets of values and vision. This familiarity can give them an enviable competitive advantage.

Yet the same deep-rooted traits that support nimble operations may also create conflict and impede day-to-day operations. Strong loyalty and sensitivity can translate into ingrained tendencies exhibited as inflexibility, prejudgment, and an inability to communicate effectively.

In all, the complexities of family dynamics can quickly interfere with sound business decisions. It’s no wonder only one in three family businesses survives to the next generation.

Toiling together in a family enterprise presents challenges that other types of businesses never face. Those challenges require unique set of management strategies to both run a family owned business while at the same time negotiating family matters. Doing it successfully depends on several key factors.

Well-defined roles and responsibilities. From the outset, it’s important to assess who is better in which roles, determine the scope of responsibilities, and stick to those positions. While collaboration is always encouraged, having family members who recognize and respect the scope of one another’s responsibilities will help prevent meddling and interference, particularly as the business grows and encounters new challenges.  

Established job descriptions and qualifications. You can prevent the appearance of nepotism by ensuring there are job descriptions in place throughout the organization that spell out the qualifications, education, and experience required for each position. Then insist that all family members meet those qualifications, just as you would for non-family members.

Fair compensation. Establishing and justifying compensation levels commensurate with job responsibilities is essential. Equal pay and promotion opportunities should be made to non-family members who perform the same work as family members.

Shared business goals and strategies. Families are constantly transforming. Relatives grow older, kids go to college, weddings and divorces occur, new generations are born, homes are bought and sold. Such changes create shifting personal goals that, if allowed, will greatly influence the business goals.

Establishing a shared vision for the business is critical. Revisit and re-examine the company’s overall strategic plan regularly with family members to keep everyone on the same page and working toward the same objectives.

Established boundaries. Without clear boundaries, shoptalk can overshadow family time and family issues can dominate the business. Many family owned companies make it a rule to keep business and personal lives separate. They limit business discussions while on the home front and schedule regular family meetings as appropriate.

Expert, outside guidance. Obtaining the services of an outside advisor can be helpful for facilitating business decisions, for bringing a fresh objective perspective, and for resolving conflict when disagreement occurs. An advisor can also help establish a process and ground rules for raising issues and debating them fairly.

Succession planning. It’s an inescapable fact that private business owners will eventually transfer ownership of the businesses they’ve built. Most owners do not like to think about an exit strategy, but a strategy is precisely what’s needed in the form of succession planning.

Proper planning can help ensure the continuation of your company and supports a smooth transition when the time comes. Advanced planning can also provide more financial options and lets you realize maximum value out of the business.

Above all, family owned businesses must work hard to keep the lines of communication open. Honest communication combined with trust and respect can lead to stronger family bonds, and even stronger business success.