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Mon, Jan. 27

Column: Planning key to helping family businesses succeed

Question: My family and I get along well together and have taken on a few successful business projects. Now we are considering making this a full-time venture. What can SCORE tell us about possible problems and advantages involved in a family business?

Answer: Although all partnerships have areas of contention and compatibility, operating a business with a spouse, parents, siblings, children or other family members does pose some risks beyond those of non-family enterprises. The dynamics and emotional ties among family members can influence what they do and say, making it difficult to criticize or discuss certain topics.

Conversely, the same connections that create a happy family can also result in an added dimension of loyalty and commitment that can help a small business achieve higher degrees of success. According to the U.S. Small Business Administration, family businesses comprise 90 percent of all business enterprises in North America, and 62 percent of total U.S. employment.

One important element for ensuring a successful family business is making a commitment from the beginning to open communication. Make sure everyone's roles and responsibilities are well-defined, particularly for those coming into the business as investors. Conduct regular meetings to assess progress, share information, air differences, and resolve disputes.

Doug Baillie, franchise co-owner of PuroClean Disaster Response, says that he and his wife and partner, Peggy, who handles the administrative aspects, make it a practice to speak the truth in love. "This means that we give each other corrective criticism, as well as facts about circumstances, even if it's bad news," Baillie says. "The difficult part is timing," he adds. "We preface criticism or bad news with, 'We need to discuss (this) when you have some time.'"

Baillie explains that bringing up difficult issues "on the fly" adds to whatever stress one of them may be feeling at the time. "I constantly remind myself that my wife is my best fan and I need to allow her to be my best critic."

To maintain good communication, the Baillies discuss most large-ticket items before purchasing.

Another way to make a family business successful is to treat family and non-family the same. Your business' pay scales, promotions, work schedules, criticism and praise should be administered fairly. "As a small restoration and general contractor business, we tend to treat our employees and even our customers as family," Baillie states. "When I was in the Navy, once I got home, I left the job at the pier and was Daddy and Husband. When I retired from the Navy, I imagined even more time with the family. This was an error in thought. I have found that I am constantly thinking about jobs and our clients. The downside of this is that their problems and issues can keep me awake at night."

One of the greatest communication-related issues arises over succession. According to the Family Business Institute, only about 30 percent of such businesses survive beyond the founder's generation.

The Baillies have taken succession into consideration. "One of the biggest reasons we wanted to have a family business after the Navy was to teach our children good work ethics, and then later on, if they like the business, to turn it over to them. We bring our two oldest out on non-hazardous jobs whenever their schooling permits."

Get your family business off to a great start. Sign up today for the Business Planning workshop, taking place over five Wednesdays from Jan. 14 - Feb 11. Cost is $90 for two people from the same business. Go to http://northernarizona.score.org/localworkshops, call 928-778-7438 or email scoreoffice@scorenaz.org.

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