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Family businesses can be a blessing or a disaster. The root of a well-run family business is based on treating it as a business, not as an extension of the family. Here are ten guidelines that successful family businesses practice.

1. Get the family member to work elsewhere first. It is not absolutely necessary for it to be with an insurance company or agency, although this would be helpful. They must prove to themselves, to you, and to other employees that they can be successful on their own. It is also much healthier for the company that they come up with some new ideas and training.

2. Don’t expect more or less from them than you would expect from any other employee. Family members may try harder or not at all. They need the motivation of the boss, like any other employee. Apply all agency rules to family members and strictly adhere to performance reviews and salary administration. Give family members responsibility and authority as they are prepared for it. Give them enough rope to prove their worth and do not question their decisions within the parameters of authority you have given them. This is difficult to do with any employee and much more troublesome with family members, especially children. Avoid both extremes, either by cutting them too far or driving them harder than other employees.

3. Don’t create a job for a family member. Either you have a vacancy that you qualify for, or you don’t. If there is no suitable vacancy, wait until you need to hire someone and / or have the appropriate qualifications.

4. Keep business and family matters separate. Never discuss family matters in front of other people at the agency. Use the names of family members and try not to call yourself “dad,” “mom,” or “junior” during business hours. Do your best to downplay the family relationship when you are around other employees. Do not discuss business at family gatherings, as this can strain personal relationships.

5. Keep the lines of communication open. Inform family members of your perpetuation plans so they know what you expect of them long before they are old enough to join the agency. Don’t expect your mind to be read. Pay attention to any children who may be resentful all the time in the past that you spent with the agency instead of them. The passive aggressive behavior of an abandoned child can be very destructive to the business. Additionally, sibling rivalries can also wreak havoc on an otherwise successful business. If necessary, heal old wounds with the help of professional advice.

6. Never leave the agency to two people (family members or not) on the basis of 50/50 ownership. The ball always has to stop somewhere. And two brothers may already have some built-in differences of opinion that make decisions more difficult to manage effectively. It may work in some cases, but these are the exceptions. At the very least, place an outside person on the board of directors as a casting vote.

7. If possible, develop an organization chart in which family members are dependent on other people besides you or other family employees. Make sure other employees understand your relationship to family members and to whom they are responsible. Just because someone has the same last name as the owner does not mean they have the same level of authority and everyone should know it. Unclear relationships can cause confusion and dissension and can cost the agency good employees.

8. Create a board of directors that includes members who are not family members. When you need advice on how to deal with difficult problems, it is important to have someone involved without emotional family attachments. Use outside professionals, such as certified public accountants, lawyers, or consultants. Also consider joining a think tank of other business owners.

9. Make family members pay for the property, even if it comes at a discount. Most people don’t appreciate something they got for free, compared to something they had to earn to get. The concept is that if they pay it (or have to sacrifice something for it), they will value it more and do a better job of managing the agency. Similarly, children who are not associated with the agency should not be owners, as they may not appreciate what it takes to run the business. Also, keep the IRS in mind. You must properly value the property that you give to family members, whether through gifts or cash transactions.

10. Make sure all participating family members agree to these guidelines. There is no point in having guidelines or rules if no one agrees with them or if the rules are implemented sporadically. All family members must accept these “rules” for the family business or they will not be able to be part of it. This is where tough love comes in. Children do best when rules are clearly explained and followed consistently. The new motto for the business should be “it’s nothing personal, it’s just a business.”

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