Family issues can be complicated. Throw in business issues, and you have a real challenge. Many of the contracting businesses in the United States are family businesses. There are some realities owners of family businesses need to face and deal with for the good of everyone at the company.
First, if the business fails, everyone loses. Leading with your heart and not the numbers builds an enabling environment. Family members should be hired according to their skills and abilities. Having someone in a position who cannot do the job is unfair to the person and the company.
Both business and people change. Such changes can impact overall business operations. For example, a spouse who works in the office while raising the children might work great at $200,000 in sales but could be a disaster at $800,000. An owner who reaches 55 and feels he or she has the right to cut back can also lead to problems. Many mature owners, in theory, want to take more time off and hand the reins off to the children, but in reality they won’t let go. In other cases, siblings want the title and income but not the responsibility. One way to help manage these types of problems is to implement a companywide planning process that includes goal setting, accountability and clear communication.
Working as a team in a family business is even more challenging. Family communication practices and dynamics are a reality. My wife is one of the best office managers I have ever met, but I doubt we would work well in the office as a team. Boundaries can be set and communication can be a challenge. Even when there is a situation where one family member is good at one set of skills and another excels at something totally different, challenges persist. For example, a wife may pay the bills while the husband performs the estimates and manages the work. At first glance, this seems like a perfect business marriage. Each person is using his or her strengths. The problem is that the husband may make operational decisions that heavily impact the financial health of the company. If he prices work too cheaply or buys equipment when there isn’t enough money to fund the purchase, funds can run short. The shortage of cash can create conflict. Since the business is the family’s source of income, the battle spills over into family life. Such husband-and-wife teams must act as a CFO and vice president of operations, and make joint decisions.
Passing on the family business can be every parent’s dream, but making that happen may not be in the cards. For smaller businesses that are not financially successful, it may be something as simple as the business will support the founding family but it does not have enough income to support two siblings. I have known situations where parents with a business that did $500,000 in sales left it to four siblings, and the results were not only financially disastrous, but now the kids don’t even speak to each other. In larger businesses, it still can be a challenge because some family members are more capable than others. And in some cases the business is left to individuals who do not have a role in the business. Both of these scenarios usually lead to family conflict.
Reinventing family communication patterns can also be difficult, especially when it comes to setting boundaries. It is not uncommon for a child who has issues with accountability to also have issues with employment. In others words, it may be unrealistic to expect a child to come to work in the family business and suddenly succeed and have all of his or her bad habits simply disappear. Worse, the founders of the business who are also parents have already developed a communication pattern that may be difficult to change. In other words, if little Johnny did not pick up his underwear off of his bedroom floor, there is a good chance he will not pick up his tools at work. A possible solution is to have siblings work somewhere else prior to joining the family business. This allows children a chance to fail and make sure they are responsible for their own behavior prior to joining the family business.
So what are some of the solutions for running a better family business? Try to keep business conversations at work and family conversations at home. Start a planning process that forces communication and public accountability. Consider hiring a neutral outside consultant to help monitor and manage the situation. Making a will and completing the legal side of succession is complicated, but most founders ultimately do it. However, legalities alone won’t make it happen. Also focus on the management transition of your business. You will find this demanding and time consuming, but without it the business may fail.