If your family is interested in starting a business together, it’s probably obvious by now that not everyone will be happy with each decision or pathway selected. However, the idea is noteworthy and one we’d like to believe, which is why we’ve included it here. In addition to keeping everyone in a positive frame of mind, how does a multi-generational family business launch and grow to profitability? Each family is unique, and each member within it has concepts and goals to add to the agenda; even the youngest family member will bring viable ideas to the table. Let’s discuss how to structure and prepare for the launch of your multi-generational family business.
Create the Legal Entity of the Business
First, create the legal entity of the business that best suits your family. There are some options for consideration that may fit your needs:
- C Corporation: Designed for more than 100 shareholders, the profits are taxed at the corporate level and after distribution to shareholders. There is a wall of liability protection between the corporation and the shareholders.
- S Corporation: A subset of a C Corporation; designed for fewer than 100 shareholders, this structure works well for families because profits pass directly to shareholders at the end of each fiscal year and are taxed on an individual basis. There is a wall of liability protection between the corporation and shareholders.
- Partnership: A partnership is designed for 2 or more shareholders who distribute profits as agreed, with both sharing in responsibility and management. Liability protection is built in.
- Limited Liability Company: A collection of members who are defined by state regulations. This structure may have one member or more; states will set rules and limitations to be followed.
Build a Business Plan
Next, after choosing a legal entity, your family business is ready to embark on building a business plan. This free business plan template will assist your family in outlining the major components of your business: assigning roles and responsibilities to family members; creating an operations plan; conducting research; and preparing a financial plan and forecast. Although these sections of the plan will take time to compose, the family will be able to set meeting structures in place, clearly define roles, and review plans going forward with a stakeholder interest for each member in the process.
Create a Business Meeting Format
The next step in building your multi-generational family business is creating a business meeting format for each member to follow. A structured format for meetings ensures the discussions stay on track, members are heard equally, and decisions are made with parity. Use a standard business agenda format to plan and execute meetings. As a family, there will be laughter and enjoyment, along with areas of disagreement. Determine in advance how your family would like to proceed in any conflict to reduce tension when these may occur. Exhibiting good manners and respectful conduct will be two attributes of a well-functioning family business; aim together for these high marks.
Conduct Research on the target Audience and Competition
In the next step, you’ll work toward completing the business plan by conducting research on the target audience and any competition. Data analysis from research informs the marketing strategies and differentiation processes for the business; as such, each is critical to success. Also, conduct any product testing or necessary proofing steps for a service-related business as a way to finalize the product or service and work out any kinks that need to be corrected prior to launch.
Develop Marketing Strategies
Setting the marketing strategies in place begins at this point and will continue for the life of the business. Although all ideas may be sound, some may be more conducive to capturing potential customers and bringing them to purchase. Marketing ideas will need to be centered on both the audience for the product or service and the compelling image of your family business. For example, social media may be used to highlight your product as well as your family. Facebook and Instagram are perfect targets for images of products and family. In addition, the business website needs to be fully developed and designed to bring the best communication possible to potential customers. Include positive images and messaging, a family blog, announcements, industry trends, and other items to build interest and keep it on your website.
Compile and Finalize the Business Plan
Finally, compile the sections of the business plan into one document and prepare to present it for funding, if needed. Your multi-generational family has a compelling story and a structured plan to go with it; share with interested investors or lenders and use the opportunities to request funding that will carry the business through launch and the first years of business.
Starting a multi-generational family business is an exciting and challenging adventure. Keeping everyone happy may not always go according to plan, but you can be assured your business will with a structured business plan in place.