Running a family-owned construction business comes with its own unique set of opportunities and pitfalls. Between managing employees, some of them family members, and identifying a successor to continue your legacy, the dynamics of a family-owned business are far from cut and dry.
Even though there are challenges to managing a family-owned business, there are several strategies business owners can use to get on (and stay on) the path to success.
1. Hold Everyone to the Same Standards
No matter your relationship with them, every employee, including family members, should be held to the same core company values, standards and policies as everyone else on your staff.
Granting certain liberties to family members is not only guaranteed to undermine those who do follow the policies, but also jeopardizes the integrity of your business by compromising the ideals your company was founded on.
More often than not, the destruction of a family-owned business comes down to the decision or action of a family member who violated a core company policy. To keep your business safe from avoidable setbacks, make sure all family members in the business understand that they are not exempt from your company’s policies.
2. Consider Forming an Independent Board of Directors
Tough decisions can be made even tougher when the decision negatively impacts family. Family ties are built on emotion, but to operate a successful business, sound, logical choices must be made. Having an objective board of directors can help ensure that the right decisions are being made for the good of the company, even when that decision involves family.
With an impartial body to assist with the decision making process, you can help guarantee that your business and relationship with your family is not derailed every time it’s time for a hard call to be made.
3. Make a Plan and Stick to It
There is a direct tie between up-front planning and profitability. However, when it comes to proactive project management, many construction companies continue to miss the mark, taking a hit in both profit and the integrity of services offered. The trust and relationship that you foster with your clients is dependent on the services you provide. Companies, especially those that are family owned, that provide timely, quality service see a direct correlation to their bottom line.
4. Don’t Lose Your Best Employees
One of the toughest issues facing the construction industry is its inability to attract and keep skilled, hard-working employees. Due to the diminishing number of qualified candidates, you can be sure that your employees are being recruited by your competitors. To help prevent this, it is important to have an effective performance management system to reward your good employees and provide a career path for them.
Good employees are not only necessary to get the job done and guarantee the success of your business, but can also serve as a key component when you are ready to retire. Even though your business may currently be family owned, selling or transferring to another family member may not be your best option, meaning you might need to draw a succession candidate from your pool of employees.
5. Make an Exit Plan
Any good company owner hopes that their business will continue to succeed long after they’ve retired. To ensure the future success of your business, anticipate starting the exit planning process seven to ten years in advance. Getting the best value for your company and ensuring your successor(s) have the tools needed to keep the company afloat means looking to the future.
Creating an exit plan can be difficult, but by implementing exit planning strategies like being proactive and choosing the right successor, you can put yourself into the best position for getting real value for your business.
Not sure where to start with exit planning? Our Business Exit Planning Checklist can help.
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Editor's note: this article was originally published in 2015. It was updated with new information in 2021.
