Family-owned businesses comprise the majority of businesses in this country and many have achieved great success. Many hugely successful companies began as family-owned businesses, and often their continued success can be attributed to the values and management style instilled by the family.
Conversely, many family-owned businesses fail due to their inability to deal with the unquestionable challenges of mixing family and business. The key to success for a business that is all in the family is to address these challenges head on, and that includes managing the squabbles, as well as, the successes.
Issues Unique to Family Businesses
Family Disharmony = Business Disharmony
To have disagreements within a family is normal. Intra-family squabbles tend to remain within the walls of the home. But when a family unit overlaps with a business unit, it is not uncommon for the disharmony to spill over where it can become a disruptive force in the business. And the disharmony can flow both ways. When conflicts arise within the business, the discord is carried back to the kitchen table.
The detrimental effects of family problems on a business are felt at all levels of operations, from the completion of basic tasks to hiring and retaining quality employees. Feuding family members can unintentionally sabotage the progress of the business by creating an unpleasant environment for non-family employees.
The Importance of Family and Business Strategic Plans
Businesses must engage in a strategic planning process in order to ensure that their goals are pursued and their business goals are achieved. In addition to this, a family-owned business should engage all family members in a strategic family plan with a separate family mission, goals, responsibilities and roles.
Determining what is important as a family and agreeing on values can shape the business mission in way that all family members fully understand the stake they have in building a profitable business. Conversations around this family strategic plan can shed light on topics such as the role of the business within the family, succession planning and inter-generational expectations.
Creating an advisory board is one method of keeping business mission and goals in focus and can provide guidance on company policies. The board should be comprised of family members along with outsiders who bring relevant business experience. These advisors can bring objectivity to the discussions and potentially counter the emotions of the family members.
Family is family, but business is business.
As part of the separate family and business strategic plans, roles and responsibilities can be assigned to each family member that are relevant for each respective set of goals: the family goals and the business goals. All members must agree that family issues remain at home and that if any family discord is carried into the business it will be considered a violation of company rules that will be dealt with appropriately.
As a business unit, the family members need to establish specific and strict guidelines and qualifications for roles and responsibilities within the business. Family members need to agree on their respective areas of responsibility and a specific plan for each individual’s advancement can be developed that includes a timeline and milestones for achievement. It is important to provide family members with a path to achievement that makes each of them feel like an important part of the business.
Communication is the Key to Success
Just as any business conducts weekly or monthly strategy meetings, a family-owned business should do so regularly for both the family as well as the business. The mission, values and goals of the family strategic plan need to be revisited often and their connection to the success of the business needs to be reinforced. Goals for the family should take precedence over business goals, with the recognition that the business goals are the means to achieving the family goals.
A family-owned business that identifies the core values of both the family and the business and constantly communicates them, can better maintain the dual focus on everything that is important for business success and family harmony.