Business

Thinking of Hiring a Family Member for Your Small Business? Here’s Why You Should Think Twice

Bringing family members into your small business might seem like an appealing idea, often driven by the desire to strengthen family bonds and keep the business within the family circle. It very much seems a win-win situation. At least, on first thought.

However, this decision merits careful consideration. While there are undeniable advantages to hiring family, there are also potential pitfalls that can impact both personal relationships and business success. So, read on to explore the pros and cons of hiring family members in your small business.

Pros of Hiring Family in Your Small Business

There is certainly no question that hiring one or more family members comes with a few enticing benefits. (You can probably think of a few right off the bat.) Here are some of the biggest advantages to bring a family member on board your small business:

Shared values and loyalty. Family members usually share your values and vision for the business, resulting in loyalty and dedication. Family members are more likely to be invested in the success of your business than non-family members. They’ll be more likely to work hard and go the extra mile to help the business succeed.
Trust and reliability. Family bonds often translate into greater trust and reliability, reducing concerns about employee dishonesty. Plus, you know their strengths and weaknesses, their work ethic, and their commitment to the family. This can make it easier to trust them with important tasks and responsibilities.
Flexible work dynamics. Family members might be more willing to work unconventional hours or take on varied responsibilities, contributing to the business’s flexibility. Additionally, hiring a family member can save you money on labor costs. You won’t have to pay them as much as you would a non-family member, and you may be able to arrange a more novel pay structure or compensation package.

Another benefit is their personal knowledge of family dynamics. Family employees often understand the nuances of family dynamics, which can be quite advantageous in managing the business together.

Cons of Hiring Family in Your Small Business

Obviously, as with anything else, working with one or more family members can cause a few headaches. While the good can easily outweigh the bad, there are some things you should think long and hard about before hiring family to work in your small business:

Blurred boundaries. Lines between work and family life can blur, leading to conflicts and stress that spill over into both realms. Working with family members can create conflict, especially if there are personality clashes or disagreements about how the business should be run. This can damage your personal relationships and make it difficult to work together effectively.
Lack of objectivity. Family dynamics can hinder unbiased decision-making, potentially leading to poor business choices. When you’re working with family members, it can be difficult to be objective. You may be more likely to give them preferential treatment, even if they’re not the best person for the job.
Creating unfair perceptions. Non-family employees might perceive favoritism or unequal treatment, affecting team morale. What’s more, it could involve limited skill diversity. Relying solely on family for expertise might limit the diversity of skills in the business.

The decision to hire family members in your small business requires careful consideration of both the benefits and challenges. While shared values, loyalty, and trust can be advantageous, the potential for blurred boundaries, lack of objectivity, and conflicts should not be underestimated. Navigating this dynamic successfully requires a balance of clear communication, well-defined roles, and professionalism.

Before extending a job offer to a family member, weigh the pros and cons, assess the potential impact on both your business and personal relationships, and establish strategies to manage challenges that might arise. By doing so, you can make an informed decision that serves the best interests of both your small business and your family ties.

Interested in learning more about business? Then just visit Waters Business Consulting Group to learn more about us and the services we offer.

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How to Tell Your Employees You’ve Fired Someone

April 30, 2018 No Comments

How do you tell your employees you’ve fired someone? The topic makes most entrepreneurs very uncomfortable. But, there are certain situations which call for this type of action. Previously, we’ve talked about how to fire someone. However, what happens thereafter? It’s not like people won’t notice he or she is gone. So, how do you deal with remaining employees in a way that moves your company forward? The truth is, there is no such thing as a perfect transition. However, there are ways to make it go smoother. Signs it’s Time to Terminate an Employee Before you do take the final step of termination, you should be totally sure it’s the only recourse. For instance, a team member who consistently drags down productivity (and, won’t take steps to correct their behavior). Or, an employee who drains morale or constantly stirs-up drama are also toxic — don’t let your organization suffer unnecessarily. Also, an employee who is apathetic doesn’t care about their work product or customers isn’t worth keeping around. One thing we know about human nature is that when there’s a mystery, people will solve it themselves: They make up the ending, and it’s almost always worse than reality. And that’s the problem–if you don’t tell people why, they’ll make up why. And the wrong why is almost always destructive. Information vacuums fill with rumors, and rumors lead to anxiety. —Inc.com Then, there’s the serial rule violator. Someone who just refuses to play by the rules. It’s time to stop banging your head against the wall and do your business a favor. These situations are typically the most disruptive and harmful to a company. How to Tell Your Employees You’ve Fired Someone Now, if it’s time to let a team member go, you’ll have to navigate your employees through a weird experience. Here are some helpful suggestions for how to tell your employees you have fired someone: Make a simple announcement. Convene a meeting or send out a memo. Simply state, “Bob no longer works here. Our transition steps are 1, 2, and 3. If you have any questions, please see Sue.” That’s it. Straightforward and to the point. Don’t share details or communicate negatively. After terminating an employee, the human temptation is to share your reasons for the termination in order to rationalize your decision. And, sometimes this leads to making negative comments about the terminated employee. Do not fall into this trap! Be a leader. Otherwise, any other communication is destructive and deteriorates your culture and you lose respect with your existing employees. Don’t tolerate rumors. Rumors are inevitable in these situations. Keep your ears open and if you hear one, nip it in the bud. Be polite but direct and firm. Do not let rumors become a distraction. Give people a chance to step-up. Since there’s an open position, you can ask who is willing to step-in and fill the void. This is a great chance to see which team members are the most eager and loyal. Seize the opportunity. This is likewise an opportunity to reset the company narrative. You might want to take it in a different direction or get back to fundamentals. Whatever change you’d most like to make, now is a prime opportunity. How do you tell your staff you’ve let someone go? What other suggestions do you have for these situations? Please share your thoughts by commenting! Interested in learning more about business? Then just visit Waters Business Consulting Group.

Common Franchise Pros and Cons

August 5, 2018 No Comments

Franchises are a great way to get into business. But, these models aren’t for everyone. There certainly are pros and cons to the systems, regardless of industry. However, it’s an effective way to start a company and it’s a quite popular method. For instance, there are approximately 400,000 franchises in the United States alone, according to the International Franchise Association. These employee nearly 10 million people and range across 75 different industries. But, is it for you? Most Common Franchise Downsides Okay, let’s begin with downsides of owning a franchise. Perhaps the largest can easily be capital expenditure or start-up costs. Some are quite large but others are relatively inexpensive. Along the same lines are the fees. You’ll pay for marketing materials, royalty payments, and more. Speaking of costs, you might be subject to sole vendor sourcing. Meaning you must purchase certain materials and supplies from approved vendors. If buying an existing business doesn’t sound right for you but starting from scratch sounds a bit intimidating, you could be suited for franchise ownership. New franchisees can avoid a lot of the mistakes startup entrepreneurs typically make because the franchisor has already perfected daily operations through trial and error. —Entrepreneur.com You must also comply with the proprietary standards, set by the franchisor. Now, you might have some flexibility with said standards, but it’s usually limited. Additionally, you could also be locked into a contract. Then, there’s the ongoing success of the franchisor. In other words, the “parent company” must continue its track record. And then, there’s always risk involved with any endeavor. Biggest Franchise Advantages Of course, franchises have plenty of upsides. If they didn’t, there’s no way these models would routinely demonstrate such high levels of success. People simply wouldn’t waste any time (or money) and the entire notion would eventually disappear. But, franchises do largely succeed. So, here are the biggest franchise advantages: It’s an already established brand. Here’s what attracts so many entrepreneurs to buying franchises — it’s a known quantity. Consumers are already familiar with the brand and its products and/or services. Which means you don’t have the burden of establishing it from scratch. Marketing and operation support. Another big benefit is that you’re not out on your own. You receive marketing and operational support from the franchisor, which is a huge plus. Proven system of employee training. Along the same line is there’s already a working system in-place for employee training. You don’t need to work your way through trial and error to refine a workable training system. Access to proprietary operating methods. Speaking of an in-place system, you also don’t have to try to peel back the veil to learn how the system works. You’ll get all the information you need to open and run the business with actionable guidelines. What other franchise pros and cons would you add to the list? What are your thoughts about buying a franchise? Please comment and share your ideas! Interested in learning more about business? Then just visit Waters Business Consulting Group.

Small Businesses are Increasingly Turning to Alternative Lenders – Here’s What You Need to Know before Borrowing

April 28, 2023 No Comments

Even before the collapse of Silicon Valley Bank or SVB, there was a tightening in the commercial credit market. Post-collapse, small businesses have found it increasingly more difficult to secure capital from traditional lenders. Still in need of cash infusions and lines of credit, small businesses are turning to alternative lenders. Advantages and Disadvantages of Borrowing from Alternative Small Business Lenders Alternative small business lenders are non-bank lenders that provide financing to small businesses. They offer a variety of loan products, including term loans, lines of credit, and equipment financing. Alternative lenders often have more flexible lending criteria than traditional banks, making them a good option for small businesses that may be turned down for a loan from a traditional lender. Of course, even though all of this sounds good, there are reasons small businesses have historically relied on traditional lenders. This is due to the fact that there are not only upsides but also, downsides to using an alternative lender. So, let’s take a look at the pros and cons of borrowing from alternative lenders. Pros of Borrowing from Alternative Lenders Faster approval and funding. Alternative lenders often have a streamlined application process that can be completed online or over the phone. This can lead to faster approval and funding, which can be critical for businesses that need money quickly. More flexible terms. Alternative lenders may be more willing to work with businesses that have less-than-perfect credit or that are in the early stages of growth. They may also be more willing to offer loans with longer terms or lower interest rates. More options. Alternative lenders offer a wider variety of loan products than traditional banks. This includes term loans, lines of credit, and merchant cash advances. No personal guarantee required. Some alternative lenders do not require a personal guarantee from the business owner. This means that the business owner’s personal assets are not at risk if the loan is not repaid. Although these are some quite compelling reasons to seek out capital from an alternative lender, there are also a few considerations you should take into account so you have a better understanding of how these lenders work. Cons of Borrowing from Alternative Lenders Higher interest rates. Alternative lenders typically charge higher interest rates than traditional banks. This is because they are taking on more risk by lending to businesses that may not be as creditworthy. Shorter terms. Alternative lenders often offer loans with shorter terms than traditional banks. This means that the business owner will have to make larger payments over a shorter period of time. Hidden fees. Some alternative lenders charge hidden fees, such as origination fees or prepayment penalties. These fees can add to the overall cost of the loan. Less customer service. Alternative lenders may have less customer service than traditional banks. This can make it difficult to get help if you have questions or problems with your loan. Now you have a better idea of what to expect from alternative lenders, you are more informed about your options and this will give you additional choices. Taking it a step further, you should also consider the following if you are in need of a line of credit or some operating capital. When to Borrow from an Alternative Lender Alternative lenders can be a good option for small businesses that need money quickly, have less-than-perfect credit, or are in their early stages of growth. However, it is important to carefully consider the pros and cons before choosing an alternative lender. If you are considering borrowing from an alternative lender, be sure to shop around and compare rates and terms from multiple lenders. You should also read the fine print carefully to understand all of the fees and conditions associated with the loan. Interested in learning more about business? Then just visit Waters Business Consulting Group to learn more about us and the services we offer.