Family businesses have a special place in Mississippi. Many skills come into starting and running them. Small business advisors suggest that skills used for small businesses can also be used to successfully operate family businesses.
“Almost all of our workshops for small businesses are also for family businesses because the same techniques apply,” says Don Fischer, director of the Small Business Development Center at the University of Mississippi. “The first thing is to have a clear vision of where the business is going. That includes having commitment, passion and high energy and drive, plus the ability to communicate that vision to others.”
Tammy Arthur, Ph.D., is an assistant professor of business at Mississippi College where she teaches management information systems and an introductory entrepreneurship course. She also owns Computer Service Center Inc., which she and her late husband purchased in 1988 from the original owner. The business provides a full range of computer hardware, software and support, specializing in accounting and point-of-sale packages. It serves businesses across Mississippi, South Louisiana and western Alabama.
“My advice for starting a family business is to be really careful,” she said. “Spell out in advance what the financial arrangements are. If family members are providing financing, is it debt or equity? What role does each member play in the new venture?”
She stresses that even though it may feel awkward to write down all of the agreements, it should be done and can save a lot of heartache later.
Two-way communication is the key, says Henry G. Thomas, CPA and director of the Jackson State University Small Business Development Center. “Find out what the goals of family members are,” he said. “Do they want to be a part of the business? Communicate clearly your goals, ideas and that you want them to participate.”
It’s also important, he says, to train and educate family members so they will be useful to the organization and, more importantly, viewed as such by other employees of the business.
“Operate the business like a business and the family like a family,” Thomas said. “That is the key to keeping things professional at work and personal at home. Additionally, do succession planning and pay and award family members for the work they do as you would other employees.”
Thomas sums up his best advice thusly — operate the business as you would if it was not a family business, meaning that you follow all the best advice in the areas of management, accounting and marketing. For assistance, he suggests visiting the local small business development center and checking out these Web sites, www.familybusinessmagazine.com and www.familybusinessinstitute.com.
Arthur also recommends visiting small business development centers, and adds the U.S. Small Business Administration’s Web site to the list at www.sba.gov, which she says is a treasure trove of information. Among a business’ best friends, Fischer says, are CPAs, attorneys, insurance agents, bankers, chambers of commerce and suppliers.
“One of the most common pitfalls is not having a separation between work life and home life,” Arthur said. “Conflict at work becomes conflict at home.”
Fischer believes education and training plus actual work experience equals the ability to anticipate problems in family businesses, just as it does in small businesses.
He adds these important tips. “You should have the management skills of planning so you can predetermine the course of action to be followed, organizing to arrange and relate work so it can be effectively performed, directing/leading so you can influence people to act to accomplish objectives of the business and controlling to assess and regulate work in progress and measure results,” he said.
Other advice from Fischer includes having knowledge of the business’ target markets and segments. “It’s crucial to know what your customers need and want, your own company’s strengths and weaknesses as well as the strengths and weaknesses of competitors,” he said.
Adding a business plan that is understood and accepted by all internal and external partners is also important. “The business plan should include measurable goals with completion dates, financial forecasts and benchmarks and financial budgets,” Fischer said.
Additional elements of running a family business include identifying and satisfying customer expectations with systematic feedback methods and building, maintaining and using a customer data base — something Fischer identifies as one of the most valuable business assets. Maintaining consistent quality through policies, procedures and employee training to create a unique brand and a base for continual improvement is a major contributor to success, too.
Contact MBJ contributing writer Lynn Lofton at firstname.lastname@example.org.