Challenges for SMEs

During this series I am looking at a number of issues relevant to all small and medium enterprises and identify both the opportunities and challenges associated with each issue.

Topics to be covered include planning, staff and recruitment, customers and service, marketing, competition, new products and services, being well organised, collaborating with others, understanding and analysing risk, managing the money, going into business with family or friends, grants, loans and investment, expansion and growth and technology and exporting.

Today my focus is on going into business with family or friends.

Family or community businesses are extremely common all over the Pacific and we often employ family members before looking outside.

They have the advantage of working with people we know and already have close relationships with.

However, there are many challenges that we need to be aware of.

Many people go into business with family or friends because it seems easy and the right thing to do at the time.

And of course, it might be! Just because someone is a family member, or a friend doesn’t make them the right business partner or even employee.

Do they have the right skills and attitudes?

Can we separate our family/ friend relationships out from a business one?

Can we have a professional business relationship?

How will we deal with performance issues should they arrive?

How will we make the money work? Can we give each other honest feedback?

Doing business with family or friends should, in theory, be the same as doing business with anyone.

The business relationship should be professional and planned with clear roles and responsibilities and very good communications.

If we employ family members or friends, they should be treated exactly the same way that we treat non family members.

Goals and objectives should be set and measured, performance reviews should be regular and consistent.

However, it is easy to say all this — we can’t escape the fact that working with family or friends is different.

The emotional ties are different. Expectations are different. We often feel a sense of obligation to employ family members.

Many family businesses run into problems because the wrong people are in the wrong roles, yet it is hard, if not impossible sometimes, to do anything about it.

Not easy to sack our father or sister or uncle! Sadly, when a family business turns sour the family relationships usually suffer as well.

If you can, try to avoid getting into this situation in the first place by treating the employment of family members in the same way as you would with non-family members.

It is a good idea to involve an outsider to help you with the selection process, someone who does not have the same emotional attachment — a business adviser or mentor.

Make sure you have written agreements or contracts.

Set performance targets at the beginning of the business relationship.

Have business meetings, even if you see each other day.

If you work with your husband or wife or children try not to mix business with home life.

I know this is not easy, but the business can soon become demotivating if we talk about it all the time!

If you work from home, try to find somewhere where you can shut the door on the business when you are not working so you don’t have to live with it 24 hours a day!

Have business meetings where you go somewhere out of the home to focus on the business.

Working with people we are close to can be extremely rewarding and often brings an added dimension to the business but just because we are related to someone or know someone well doesn’t mean we can work with them!

Finally, if you work with both family and non family members remember to treat everyone equally and in a transparent manner.

It is a quick way to demotivate people if they feel they are being treated differently just because they are not related to you!

If you need help with understanding or analysing your employment of friends and family or you want some feedback on your own practices, then please get in touch.

* Chris Elphick is Partner in Breadfruit Consulting, formerly Learnfast Pacific, supporting the development of a range of businesses and organisations in Melanesia and other parts of the Pacific.

He is an experienced trainer, coach and business mentor and has years of experience of working with Small & Medium Enterprises. He and his partner Hazel Kirkham live in Vanuatu.

Breadfruit Consulting have partnered with Fiji Entrepreneur to develop mentoring services for new and young entrepreneurs.

If you have an issue or query related to this article, please contact Chris at or text to +6785500556

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