Family business is risky business. The majority of family businesses last 15 years or less. 70% fail to survive the second generation and 85% do not make it through the third1. Why? Dysfunctional family dynamics is one contributing factor.
The problems with family dynamics include:
– Family rivalries
– Bringing family disagreements into the business
– Hiring family members regardless of qualifications
– Mom and Dad’s unwillingness to share information or plans
These can damage a family business and stunt its growth. But take heart. Each of these issues can be turned into a strength if it is dealt with effectively.
Family rivalries reflect passion. If the family understands they are all working for a common goal, that passion can be channeled into building the business.
- Disagreements often fester until they manifest in inappropriate ways. Airing disagreements and developing a framework for decision making can help keep family problems from spilling over into the business. Family members may often disagree, but there is no more loyal employee than a family member.
- Rather than trying to give everyone in the family a job, let family know what is expected of them if they want to come to work for the business. If they know the requirements up front, it will help to self-select unqualified family members out of the business.
- Sharing information and plans with family and key employees is critical to your success. It increases the commitment levels of everyone involved.
Clarity and communication are essential to dealing effectively with family dynamics. Regular family meetings are one way to ensure everyone is “pulling in the same direction”. It often helps to have a non-family member who is a trusted advisor facilitate these meetings. The goal is to foster an environment of openness and cooperation.
For more information, visit our Business Succession page at http://www.tricirclefinancial.com/services/business-succession/ or contact me at email@example.com or 714-560-1679.
- Source: Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values, William & Preisser, 2003