Some families want to cover several bases to improve their financial situation.
Since the contemporary labor market is showing many uncertainties, launching a family business is a wise step towards ensuring several sources of income.
This doesn’t mean that family members should quit their steady jobs if they’re employed.
In this article, we’ll share some concerns common for people thinking about starting their own ventures. Also, we’ll illustrate how to overcome those worries and take the plunge into the world of entrepreneurship.
1) Register the business
No matter whether or not you or other family members are fully employed somewhere else, it’s important to register your family business. These are the three best registration options:
- Partnership. A fair ownership structure that gives every family a chance to equally distribute ownership rights and responsibilities to all family members.
- Limited Liability Corporation (LLC). This business structure removes the liability from business owners’ personal assets. On the other hand, it’s not allowed to LLC owners to use company assets for their personal needs. Another benefit of an LLC: several business owners get adequate ownership shares.
- Distributed ownership. In this ownership model, each family member has the right to pass their share to their descendants. Check out the business succession model to see why it’s important to know how ownership is going to be handled in the future generation.
If you’re not sure which business structure is the best one for your family business and its goals, contact the local IRS administration to inspect each of these options from a taxation point of view.
2) Find the right office space
A family starting a business should first rely on their existing premises and buildings. Of course, if you need a warehouse or any other special location, you can’t use your living room for that purpose.
Still, if your family business can be handled via the Internet or without any additional spaces, don’t make any additional costs at that stage.
In line with that, organize your home to meet your business needs.
For instance, you might turn one of the rooms into a business office. If there’s no room for all of you within that space, think about changing the home layout. If possible, everybody can work from their own room. That would give each family member a feeling of having their own office.
On the other hand, families launching businesses that carry out outdoor activities won’t have such issues. They can use their yard for all their operations and use one computer for accounting and other administrative services.
3) Make a financial plan
Once you know what your business will look like, it’s time to plan your finances.
For starters, write down all the monthly business costs. From the rent and overhead expenses to maintenance and workers’ contributions, take everything into account.
In some family businesses, only parents are the owners, and their children are considered employees. If you’re planning to run such a business, make sure to choose the right pension plan for your kids.
Your children might want to have higher salaries, but in that case, you’ll pay lower amounts to pension plans. It’s possible to alter their pension plans as they start their own families and change their priorities.
After that, you need to know how much money you’ll be making in the first few months of your entrepreneurial career. When you compare business costs and pension plans with the arranged projects, you’ll see how much money is left for business growth. This is one of the crucial prerequisites for starting and managing a successful family business. Therefore, take your time and calculate everything in advance to ensure that you make enough money for all your business costs and personal expenses.
Additional two cents: specify your private family budget for every single month to impose long-term financial discipline in all aspects of your life.
4) Distribute the responsibilities
We’ve already mentioned the importance of choosing the right business structure for your family business.
Apart from that, you need to adequately distribute the business responsibilities to each family member. Since family matters always include emotions, it’s important that parents leave nothing to chance when defining their children’s responsibilities.
So, put together a detailed contract for each employee/family member, with a list of business tasks and expectations.
Specify the rules for promotions and bonuses, as well. Such unambiguous criteria will ensure that everybody knows what they need to do to earn their salaries.
On the other hand, they’ll grow to understand the importance of business obligations, as well as how to organize their time and tasks.
5) Promote on the Web
Performing business activities with flying colors is nothing if it’s not accompanied by proper promotion.
Since the Internet is the predominant advertising force in the modern business world, every family business needs to promote its services on the Web.
For starters, add your venture to Google My Business. You’ll increase its trustworthiness by adding your business name, address, location, and website to that feature.
When talking about business websites, it’s important to build the right one for your business needs.
As advised by the web designers from a Web design company in Houston, small businesses need to highlight their biggest strength on the business website. From your mission and vision to the About Us section and the business blog, you need to keep the content simple, but informative, and properly organized.
Moreover, launch business pages on the most suitable social media for your audience. Try Facebook, Instagram, and Twitter to see which one brings the highest number of leads.
Finally, register to LinkedIn and other professional social networks or groups to popularize your business among other companies, as well.
Running a family business brings certain challenges in terms of rights and responsibilities, but they yield numerous benefits, as well. If you manage to keep things (and employees) in order, you’ll build a joint professional venture that keeps all the earned assets in the family.
Follow all the tips shared above to efficiently form, launch, and run a family-owned business.