Taking Family Out of Family Business
In early 2000, I had to fire my wife from our business. The business, a start-up, was struggling, and my wife was involved in running one of the departments on a part time basis between looking after our kids and working as a counsellor. Sales in the department and the store as a whole, weren’t going as expected and we needed to make changes. To reduce my stress and costs, I had to have an awkward conversation with my wife about her not working in the business any more.
We all know of a business we love that could be considered a family business. Perhaps it’s the restaurant down the road, the local grocer or garage, maybe it’s a manufacturing plant in your community. The great thing about family businesses is just that, the family. You will find uncles and brothers working together, in-laws, grandparents and teenagers side by side, sisters sharing the load, and husbands and wives and the kids all employed together.
The great thing about working with family is that if it is going well, it can be a lot of fun. Spending time with those you love and understand is much easier and enjoyable in many cases than working with strangers. The right family members understand the need to work hard, take care of customers, and grow a business. Growing up in an entrepreneurial environment can set these family members up for a future where they can be successful themselves.
Family run businesses have cultures that often take care of people in a different manner than big corporations. Because they revolve around family, they understand that there needs to be allowances for family situations. According to startups anonymous, 60% of the population works for family-owned businesses, and 57% of the USA GDP is contributed by family run businesses. Having spent my career working and owning and supporting family run businesses, I get the benefits, but I also see the challenges.
#1 Accountability: Working with family poses significant difficulties. Lack of accountability is often the biggest challenge for many businesses. Many families struggle because family members often feel that they should be treated differently from other employees. They don’t think that they should have to work as hard, or be held to the same level of responsibility as others in the company, because they have the same last name as the owners. I recognized early on that when my teenage daughters were working in our business that they needed to report to someone else. This not only reduced my stress of having to discipline them both at home and at work, but also increased the level of professionalism in the business and sent a message to my other staff that I was trying to be fair. If we can hold family members to the same level of accountability as we hold others in the company, we are off on the right foot.
#2 Family dysfunctions: No family is perfect and when we have to work alongside family members for long periods of time, family problems arise in the workplace. It's not uncommon to see that those relationships between father and son, mother and daughter, siblings, that were strained before the introduction of business into the mix become even more difficult. The stress of running a business combined with rubbing shoulders with a family member who holds a grudge for something unrelated that happened 5, 10, or 20 years ago can give new meanings to the word dysfunction.
#3 Power, Money and Control: I was once approached by a member of a family-owned business who wanted advice on how he could have his father committed to a mental institution because he didn’t like the business decisions he was making. The power, money and control that is involved when running a successful business can be invigorating and also the root cause of evil decisions. When family members are vying for control, power and or money, those things that once bound a family can destroy it.
# 4 Succession Planning: It is natural that someone might like to pass a business on to their children or grandchildren. While there are some questions about whether this might be the best move for the business in the long run, the idea of a family member taking over the business operations is appealing to many families.
There are two attributes that need to be taken into consideration but often are overlooked when picking successors to a family business.
The first attribute is Aptitude; we want to be sure that when passing over the reins that the family member in line has the skills necessary to run the business. Lack of understanding of business fundamentals can destroy a business faster than a banker can pull a line of credit.
Secondly, we need to consider Attitude; does this family member have the right attitude or do they see their succession as a right? Poor attitudes towards customers, employees or work itself can have detrimental effects on a company that dad or mom spent years building up.
Taking the family out of family-owned businesses. In order to create businesses that are very functional we need to have clarity about the rules of the game for family members at work. Understanding that there are jobs to be done and where one fits into the roles and responsibilities of the organization are key to the success of family members. If we can find ways to treat our family members equal to other employees and create healthy separations between our family work relationships and our family relationships outside of work, we can take those negative family dynamics out of family-owned businesses. Unfortunately dealing with family issues in businesses are a lot easier to think about than to actually implement.
Firing my wife was one of the hardest things I have done in my business, however changing the relationship at work enabled us to have a better relationship at home. No longer were we always talking about the business, we could focus on improving our personal and family relationships without the challenge of balancing a stressful business. Once my wife didn’t have a job in the business, she was able to support me in working on the business. Without her backing I doubt that I would have been able to manage through many of the tough times that we faced over the decades. So much of the success of family business leaders is due to the support, encouragement, and insight of those family members like Margaret who understand the dynamics of what is going on but stay in the background and offer third party suggestions that we can’t often see when we are stuck in the weeds.
Dave Fuller, MBA, is an Award-Winning Professional Business Coach and the Author of the book Profit Yourself Healthy. Dave works with his daughter Emily in his firm Pivotleader. Email your family story to email@example.com