Running a Business with Family

If you work in a company run by your family or plan to start one, then you’re not alone. It is estimated that up to 90 percent of all businesses in the United States are family owned. They range in size from the corner store to large corporations. These dynamic businesses are a great opportunity for relatives to work together, but they also come with some special challenges. The California Society of CPAs offers advice on how to address some of the unique problems these businesses may face.


In most companies, it’s possible to tell who’s in charge simply by checking their title. That’s not always true in a family business. A member of the older generation may have the title of president or CEO, but he or she may have little actual involvement in the day-to-day running of the business. In another case, a parent may have final decision making authority even though one of their children is responsible for running a department—or the entire business. These can be tricky issues to untangle, but the first step is to acknowledge that the situation exists and understand the counter-productive effect it may be having on the company.

It’s hard to get work done, in other words, if no one is sure who’s really in charge. Successful businesses set up clear lines of authority that establish who is responsible for decision making in various areas. This prevents second guessing and confusion about which decisions are actually valid.


No matter how talented and dedicated family members may be, they may not have all the experience and knowledge that the business needs. That means it may be necessary to hire outsiders to take on key positions. To make the most of their abilities, it’s important to be sure that they are given the same authority and respect as a family member in a similar position and that they have opportunities for career growth and advancement. If not, they will likely switch to a job with a more promising future, and the family business will lose the chance to take advantage of their skills and expertise.


Who will take over the business when the current leaders retire? This is a critical question for any company, one that should be answered well before any transition takes place so that the business can prepare for change. Family businesses may sidestep the question, however, because they want to avoid thoughts about parents’ mortality or possible competition among siblings.

To address the issue, it may be a good idea to call a family meeting to consider questions such as: What are our future plans for the business? Who is best qualified to lead us into that future? Once we identify a future leader, what roles will other family members—and outsiders—play in the company? What kind of compensation will new and retiring company leaders receive? These may be tough questions to answer, but addressing them now lays a foundation for the future and makes it possible for the family to focus its energies on business instead of on personal issues.


Your local CPA has extensive experience working with small companies and family businesses. He or she can provide a knowledgeable, objective perspective that can help you address any issues facing your company. Turn to him or her with any questions you may have about the best choices for your family business.
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