In early 2000, I had to fire my wife from our startup business. The business was struggling and my wife was involved in running one of the departments part-time, 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 anymore.
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 find uncles and brothers working together, in-laws, grandparents and teenagers side by side, sisters sharing the load, and husbands, wives and kids all employed together.
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If the business is going well, it can be a lot of fun. Spending time with those you love and understand is often much easier and more enjoyable than working with strangers.
The right family members understand the need to work hard, take care of customers and grow the business. And growing up in an entrepreneurial environment can set these family members up for future success.
Family-run businesses have cultures that often take care of people in a different manner than big corporations. Because they revolve around family, these businesses understand there needs to be allowances for family situations.
According to Startups Anonymous, 60 per cent of the American population works for family-owned businesses and 57 per cent of the gross domestic product in the United States is contributed by family-run enterprises.
Having spent my career working in, owning and supporting family-run businesses, I get the benefits. But I also see the challenges.
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 they should be treated differently from other employees. They don’t think 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 that when my teenage daughters worked in our business they needed to report to someone else. This reduced my stress at having to discipline them at home and at work, increased the level of professionalism in the business and sent a message to 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’re off on the right foot.
No family is perfect and, when we have to work alongside family members for long periods, problems arise in the workplace.
It’s not uncommon to see relationships between father and son, mother and daughter, or siblings that were strained before mixing in business 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 five, 10 or 20 years ago can give new meanings to the word dysfunction.
Power, money and control
I was once approached by a member of a family-owned business who wanted advice on how to have his father committed to a mental institution because the son didn’t like the business decisions he was making.
The power, money and control involved in running a successful business can be invigorating. They can also be the root causes of evil decisions. When family members are vying for control, power and or money, the things that once bound a family can be destroyed.
It’s natural that someone might like to pass a business 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 is often appealing.
Two attributes need to be considered but often are overlooked when picking successors in a family business.
So how much is a business worth?
The first attribute is aptitude. We want to be sure the chosen family member has the skills to run the business. Lack of understanding of business fundamentals can destroy an enterprise 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
To create very functional businesses, 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 family members equal to other employees, and create healthy separations between our family work relationships and those outside work, we can take negative family dynamics out of family-owned businesses.
Unfortunately, dealing with family issues in businesses is a lot easier to think about than to do.
Firing my wife was one of the hardest things I’ve done in my business. But 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 we faced over the decades.
So much of the success of family business leaders is due to the support, encouragement and insight of family members like my wife who understand the dynamics of what’s going on. They stay in the background but offer suggestions that we often can’t see when we’re stuck in the weeds.
Dave Fuller, MBA, is an award-winning business coach and a partner in Pivotleader Inc. Dave works with his daughter Emily in Pivotleader. Email your family story to email@example.com. For interview requests, click here.
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