Entrepreneurship is rarely easy, but also having family in the mix can add multiple layers of complexity — barriers and challenges that your competitors may not be burdened with.

The “family business” trend is flourishing. Recent reports reveal that family-owned companies comprise between 80 and 90 percent of businesses worldwide, generating a staggering estimated $6.5 trillion in annual sales — “enough to be the third largest economy in the world (behind the U.S. and China).”

One major component of long-term success among family businesses is simply knowing how to navigate and circumvent personal relationships in order to work together effectively, while also maintaining positive perceptions and overall integrity with non-related staffers.

Achieving all this, while tending to “standard” business issues, can be daunting at best and a death knell for far too many.

Here’s a list of seven pitfalls to avoid — all of which can cause an assortment of strife from uncomfortable family friction to completely tearing a family and business apart.

Not respecting family hierarchy. Every family has a pecking order and not respecting this order within the business will cause friction. If someone feels they are being disrespected or not being heard, it’s a recipe for resentment and conflict. A certain level of mutual respect and a feeling of collaboration is essential. Leveraging each person’s individual strengths, including management capabilities, for the business’ greater good needs to continually be top-of-mind.

- Advertisement -

Neglecting to define or agree upon roles. It’s important for family members to take an active part in choosing and defining their roles within the business. Make those roles official, which will be a motivating factor to get the family member to acknowledge his or her position. Defining objectives is also important and, again, should play to each family member’s strengths. Each quarter, family members should define one to five key objectives and goals to accomplish.

Not allowing enough leeway. Family members, especially the younger ones, need the freedom to try their own projects, even if other family members aren’t necessarily on board. If the project fails, it is a learning experience — and one that individual will remember for a very long time. If the project is a success, it’s a huge win for the individual and the business. In that vein, it’s important to remember that family members are not the same as regular employees and treating them as such can be a recipe for disaster. No one is more invested in a family business than a family member.

Not including the entire family on important decisions. In business, it’s important to include the entire family when making important decisions for several reasons. First of all, with 90 years and three generations of experience to draw upon in my own family business, not utilizing the collective wisdom and experience would be a tremendous opportunity loss.

Having “zero tolerance” regarding personal vs. business finances. On the one hand, keeping business credit cards under control is a must. Misuse can put the whole business at risk of an IRS audit. On the other hand, revenue generated by the business should not be off limits, either. Having tolerance and compassion regarding family members’ financial needs is a must.

Forgetting to celebrate the wins and to have fun. If you’re not having fun running your family business, you’re taking yourself way too seriously. Make sure you take the time to celebrate the wins. Any time an objective or goal is reached, time should be taken to celebrate that accomplishment.

Not having a conflict resolution plan. Business disputes happen and, when those disagreements are between family members, things inevitably get personal. To avoid conflicts spiraling out of control, make sure everyone signs an agreement that states any dispute is to be handled by mediation or arbitration. Litigation should never, ever be a consideration. Proper communication is key in any relationship, but even more so within the highly specialized context of family business dynamics.

At the heart of avoiding each of these pitfalls is proactive communication, systemization and conflict resolution.

Ultimately, how you interact with your family in general will influence how you interact within your business.

Brian Greenberg is an entrepreneur who co-owns and operates three companies with his father, Elliott Greenberg. He can be reached at GreenbergEnterpriseGroup.com.