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Family businesses need to avoid favoritism

The Baltimore Sun

If you are in a small business that is also a family business, you probably heard warnings about the pitfalls of working with relatives.

When bringing family members into a business for the first time, especially as investors or in a startup situation, consider putting the business relationship in writing.

Many small companies would never have survived without dedicated family members. But avoid favoritism. Pay scales, promotions, work schedules, criticism and praise should be evenhanded between family and non-family employees.

Don't be an employer of last resort for every distant relative that calls. Base employment on skills or knowledge they can bring to the business. If your children will be joining the business, suggest they get at least three to five years of business experience elsewhere. This will permit them to gain a perspective on how the business world works outside a family setting.

Problems and differences of opinion are common in a family business. It is important to keep the lines of communication clear. Weekly meetings to assess progress and air differences work well for many family firms.

Drawing some lines between business and family life will also help. Limit business discussions outside the office. Save them for an appropriate time - not at a family get-together.

Stephen L. Rosenstein is co-chairman of Greater Baltimore, SCORE Chapter No. 3. Call 410-962-2233 to speak to a SCORE counselor or visit www.scorebaltimore.org To send a question to SCORE representatives, e-mail smallbiz@baltsun.com

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