10 Tips for Running a Family-Owned Business in Arizona

Use these tips to run a successful family-owned business in Arizona. 

10 Tips for Running a Family-Owned Business in Arizona

Key Takeaways

  • Family members should always have a choice of joining the family business.
  • Choose the best family member for the job, not the best job for the family member.
  • Treat everyone the same and always avoid nepotism.
  • Keep your intention of why you started the business at the forefront of your mind.

Earnhardt Auto Centers, Spinato's Pizza, Chas Roberts, Harkins Theatres – what do these Arizona businesses have in common? They’re all family-owned businesses.

These companies started off as small “mom-and-pop” storefronts that grew to large, well-known businesses across Arizona.

If you’re part of a family-owned business or dream of starting one, keep these 10 tips in mind to grow your business while maintaining peace within the family.

Our Best Tips for Running a Family-Owned Business

Ready to start your family-owned business?

1 Give family members a choice in joining.

No one loves being forced to do something, especially getting involved in the family business. As the business owner, maybe you’ve already created a storyline in your head that your kids will join the business and eventually take it over when you retire.

While that may be your preferred option, it might not be what your kids had in mind for their lives.

Start having those conversations with your kids or teenagers as early as possible, but with as little pressure as possible. Let them know the family business is ready for them, but only if they’re ready for the business.

If they have other dreams or desires, then at least you know early on that they’re not the best candidate to join the family business and eventually take it over.

2Choose the best family members for the right job.

All employees have different strengths and weaknesses, and it’s up to the business leader to place people in the right roles in their organization – including family members.

Maybe you’re looking for someone to help with accounting or payroll. Your cousin has been looking for a job and seems like the perfect fit.

But your cousin is horrible with numbers and would rather be working with his hands doing manual labor.

As the leader of the family-owned business, you are better off finding someone good with numbers to take over accounting and your cousin will be happier without having to perform a task they're set up to fail at from the get-go.

Find the right people for the job instead of trying to find the right job for a family member. Sometimes this means the best place for the family member is at another company.

3Avoid partnerships within families.

Maybe you and your brother are looking to start a business together and it appears to be the perfect fit. You’re both passionate about the idea, you’re both willing to work non-stop to grow the business, and you’ve already decided to split the profits 50/50.

But what happens a few years in when your lives change?

What if one of you wants out of the business? What if it feels like you’re doing more of the work but still sharing equally in the profits.

There are way too many what-ifs to count and most often partnerships end in broken relationships, family drama, and holidays spent apart from each other.

Instead, you should either work for your family members or have them work for you. This way you can still share in the profits without having to share in the drama that comes with a business partnership within a family.

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4Define roles and responsibilities.

Clear roles and responsibilities in a family business are a must. When first starting a business with family, things are exciting and everyone involved is working non-stop to get things started.

However, as time goes on, the excitement fades but the work still needs to get done. Without defined roles and responsibilities laid out ahead of time, family-owned businesses can enter a period of turmoil.

This is why every business, including family-owned businesses, should have written job descriptions and expectations for each team member (or family member) in place from the beginning.

Defining roles and responsibilities early on allows family-owned businesses to quickly identify who does what, how much of it they do, and what their expectations are.

5Separate work and home.

There's one thing that often sets family-owned businesses apart from non-family-owned businesses – nepotism.

Nepotism means giving favoritism to family members over others in the workplace without regard to their merit. This could be anything from giving a promotion to a family member over someone else who is more qualified, or allowing a family member more leniency on job performance than an employee who isn’t family.

This can go both ways, meaning the boss shouldn’t be harder on family members than they would be on any other employee in the office.

Although it can be difficult, the leader in the organization must maintain the separation between being a family member of the employee versus being the boss of the employee.

6Maintain an open line of communication.

Poor communication in a family-owned business often results in conflict, disagreement, stress and fractured family relationships.

One of the most important pieces to a successful, long-term family business is having an open line of communication. This doesn't just mean an open line of communication from the top to the bottom, but rather a two-way street.

As the boss, create a means of communication for your employees and family members to communicate openly and honestly with you. When there's a culture of strong communication in the business, things will run more efficiently and you'll build trust and commitment within the business.

7Continually evolve your business.

Every business must continually evolve to stay relevant, innovative and competitive.

In many family-owned businesses, the boss may be of the older generation and should be looking to the younger generation to help evolve. Just because you’ve always done it a certain way doesn’t mean there still isn’t a better way to do it.

What if Blockbuster Video had started streaming movies, Polaroid moved to digital photography, or Blackberry adopted the touchscreen?

When businesses fail to adapt to change, they eventually fall behind the competition and ultimately become obsolete.

8Have a succession plan.

Have you thought about what will happen to the business when you retire? Who will take over, what will it look like, and how will the transition happen?

Having a succession plan well ahead of time could be the difference between the business thriving after you leave, or unfortunately failing after you hit the retire button.

The best way for a succession plan to work is for it to be gradual. Slowly start transitioning family members (or other team members) into taking on more responsibility so it’s less of a jolt when you leave the business.

The best succession plans are the ones when the new leadership takes over without anyone noticing it ever took place.

9Remember why you started the business.

Not only is it important for you to remember your why, but all family members in the business must know the why too.

This is a necessity when things in the business get hard, which is a guarantee for family-owned businesses.

There may be a time when money gets tight, the work becomes too much, or fractured relationships in the family spill over into the office.

The only thing left to lean on during these difficult times is the original why for the business.

Why did you start the business? Why did you grow it? What about the business did you love when things were great?

Who are you helping? Whose life is better because of your business? What value have you brought to your customers and to your family?

Keep the why at the forefront of your mind when the times get tough, because they will.

Family-Owned Business Frequently Asked Questions

What is the average lifespan of a family-owned business?
The average lifespan of a family-owned business is generally around 24 years. This varies depending on the specific region or industry of the business. Family-owned businesses face unique challenges, such as succession planning, maintaining family harmony, and adapting to market changes, which can impact their longevity. Despite these challenges, many family businesses can continue to thrive and even span multiple generations.
What is the best structure for a family business?
The best structure for a family business should be tailored to the unique circumstances of the family and business. Consulting with legal, financial, and business advisors can help in designing an effective structure that supports long-term success and family peace.
What do I need to know before taking over a family business?
Taking over a family business involves preserving tradition while also driving innovation. Seeking advice from mentors, attending relevant training programs, and consulting with legal, financial, and business advisors can help you navigate this complex transition successfully.

According to Lending Tree, Phoenix ranks number one in percentage for small businesses in a large city, and Arizona ranks number eight in the nation. That said, if you’re getting ready to start a family-owned business, you’re in the right place. Take advantage of our top nine tips above for starting your family-owned business off on the right foot. If you’re looking for the best in business banking, look no further than OneAZ Credit Union — currently serving over 11,000 small businesses across the state of Arizona.

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