Require outside experience from your relatives
Many small, family-owned businesses fail to thrive because they lack new ideas and have never experienced working in a larger, better-run organization. Avoid this problem by requiring that family members obtain experience working at other, more successful companies before joining the family business. This will expose them to best practices for managing operations, marketing, sales and finance which can only serve to strengthen your business.
Don't expect better or tolerate worse performance
Many parents have a difficult time managing their adult children in a family business setting. Some parents are too hard on their children, holding them to an unrealistic standard of performance. This leads to great frustration across both generations and could permanently damage the relationship and the business. Other parents are too lenient and let their children perform below par while still giving them the rewards of ownership. This leads to a sense of entitlement among the children which other employees resent. It damages the business and leaves the next generation completely unprepared for leadership. Expect from your children no better and no less than you would from an employee who didn't share your last name.