The Family Business

I’ve closely observed family businesses for many years now, and I can sum up everything I’ve observed in two words:It’s freakin’ complicated.Okay, so it’s three words.  There are times when I love what I see in family businesses—the shared sense of purpose, the honoring of the past, the tradition, the generosity, the love of the company’s product or service, the passing on of wisdom and experience, and the long connection to the community.There are times when what I see in family businesses scares me to death -- the confused sense of identity in the children, the rivalries, the failure to address real questions around succession, the brutal and destructive in-family conflicts, the unfinished nature of leaders who operate only within the family’s circle of influence, and the problems of creating real accountability for performance when accession to the throne is a foregone conclusion.It’s freakin’ complicated.

Tell us what you think.  We’d like our blog posts to begin a dialogue.  We invite your comments and questions.

I have several suggestions for anyone involved in a family business:

• Find a way to speak with complete honesty to your family about every issue surrounding the business. Without it, you’ll be doomed to a perpetual shadow dance in which no one is really sure about anything.
• Even though it hurts to bring lawyers into a family dynamic, it’s absolutely necessary. And you should probably have your own lawyer and your own accountant, separate from those representing other family members.
• Address the worst-case scenarios head on:  What if Dad dies? What if I get a divorce? What if Brother Bill decides to become a Buddhist Monk?  Many a business has folded up like an accordion because these scenarios were simply too painful to talk about and plan for.
• A majority of your company's Board of Directors  should be non-family members. I’m not suggesting the family be out-voted or lose control here—what I am suggesting is finding people you trust who will speak the truths and address the issues the family shies away from.  (A good consultant who’s willing to piss off his clients once in a while can also be a huge asset to the family.)
• Get the kids out into the “real world” for significant work experience before giving them a management role – let alone an executive post – in the organization. Even if it’s a foregone conclusion they will ascend to the throne, they need to arrive there with a sense of perspective and a feeling that they’ve earned it.

Before you enter into a family business, you should know — yes, it’s freakin’ complicated – and it requires a toughness and honesty that’s unique and challenging.Because we love our families so much, the already complex world of leadership becomes more so. Being in business with our families introduces subjective elements that cloud our judgment and engage the darker side of our egos. Unfortunately, love, loyalty, and tradition are not enough to make a family business succeed.