One of the top reasons people start a family business is to leave a legacy for their heirs: a business they can take over and pass along for generations. In order for this to happen, however, you must successfully bring family members into the company.

It's important to have your family business strategy firmly in place before you start hiring family members to help alleviate potential financial and personal problems. Additionally, some regulated industries have rules regarding the hiring or employment of family members. If you are unsure what the laws governing your industry are, consult with your own legal counsel before making a job offer.

Here are four tips on how to prepare yourself for a new generation of relatives joining your ranks.

1. Set Clear Expectations

When you bring a family member into the business, be sure to clearly outline his or her role and responsibilities. Set performance expectations early and hold performance reviews regularly. By being clear and forthcoming with these guidelines, you can help prevent potential misunderstandings.

2. Treat All Employees Equally

To protect workplace morale, treat family employees the same way you treat other employees. As tempting as it may be to provide relatives with extra perks, it can frustrate your non-family employees and potentially increase turnover. To help you avoid nepotism (favoritism shown to relatives or friends by those in a position of power), it may be beneficial to establish an anti-nepotism policy so there are clear rules in place governing the hiring and management of relatives. For example, it is often best to avoid situations in which family members directly report to each other.

Be sure not to go too far in the other direction, though. Praise and reward your family members appropriately when they have done a fantastic job. It's a best practice to ask yourself if you would do the same for a non-family employee before taking any positive or negative action.

3. Manage Family Conflict

Problems that come up with family employees in the workplace can spill over into your personal life. Decide how you will manage workplace issues before they arise. You may want to set rules for when it's permissible to discuss work problems with family members. For instance, it might be a good idea to make family gatherings off-limits for these types of conversations.

If there is a recurring issue or a particularly difficult one to fix, it may help to involve a trusted, independent third party to help mediate these discussions.

4. Create a Succession Plan

Make sure you have a plan in place for who will take over the business when you leave. Clearly communicate any goals the future generations needs to achieve before they will be considered for taking over the business. They will benefit from knowing what to expect and it will help motivate them to do well and care for the business.

Be sure to establish your succession plan beyond your retirement. Determine who will be in charge in case of sudden death. Not planning for this situation ahead of time could leave your family and business in a very difficult position at a very emotionally charged time.

Family business strategy planning can be challenging, but it's manageable if you take care of it early before problems develop. Once it is under control, you and your family can put your energy towards growing the business.

Tags: small business Family Employees Family Business Strategy Planning Family Business