I get asked a lot about family businesses, and I’ve helped hundreds. Family business problems begin with an innocent mistake: the assumption that working with someone you love is easy. The truth is there are few things more difficult. Once you accept that you’ve inadvertently taken on an Olympic-level challenge, things can change.
It’s actually very simple, but not necessarily easy. I learned how to do this first-hand when I worked on an executive team at EMyth with some of my closest friends (family, for all purposes). I actually created a tool in their curriculum that’s still used today based on what we learned and implemented for ourselves. It was a trial by fire, as they say, but we figured it out. Here are some of the basics:
I love solving family business problems because the process is very straightforward, although difficult, but the result is not only a better business but better relationships. It’s hard work for everyone involved that is immensely gratifying. The basic principle for solving family business problems may shock you at first, but try this on: it’s to learn to relate with each other, in work settings, as if you don’t know each other personally. Eventually, you learn the ability to radically switch modes, from loved one to boss or employee, etc. in an instant.
You already do this in some areas of your life. You know how to switch gears when you’re talking to a friend and then suddenly your kid calls you. You know not to talk to your boss the same way you talk to the customer service rep at your bank who’s wasting your time. This the realm of what I call “domain appropriateness.” It’s the ability to behave in a productive way relative to the situation and relationships involved.
While we already do this in many areas of our lives, inevitably we all need some work on it. Family business problems have one root cause, in my experience, and only one: innocent weakness of this skill. Here are some examples of how that plays out:
Eight Ways You Innocently Create Family Business Problems
- You don’t operate with an organizational chart, where each person has clearly defined roles and responsibilities.
- If you have an org chart, elders in the family cross organizational lines and operate with parental authority rather than according to professional responsibility.
- You talk about business in family settings, or personal things in business settings without making clear demarcations when you change the subject.
- You hold family members to different standards than you do other employees (higher or lower): this includes not bothering to define their roles, not holding them accountable, not managing them, tolerating unprofessional behavior, etc.
- You create or maintain positions that fit family members abilities, interests, and/or financial needs rather than first considering what makes sense for the business.
- You’re not willing to transition a family member who doesn’t do their job well enough, or isn’t a good fit for the business.
- You don’t have a clear, contractual succession plan that would satisfy a non-family professional who was planning on buying your business. The effect is that senior family members hold the reins of the business because of their leadership roles in the family, and the hand-off is not based on professional competence.
- You feel obligated to hire family members based on their DNA rather than appropriateness for the job or long-term health of those involved.
I know what you’re thinking, “It sounds like you want me to run our business like a cold, corporate bureaucracy! We created our family business so it was just that: a family business. You want to remove the family part, and that sounds awful!”
I get why you’d have this reaction, and I assure you that’s not the end-result. When you skillfully separate business and family, you don’t get more good business and less good family. You get more good of both. When it’s mixed up, both lose out. It’s like a hybrid bicycle: it can’t race on the road, and you can’t take it down a mountain. You want two bikes, ideally, and you can have them!
You want great business and great family, right? Stop taking your road bike down the mountain! How’s that been working so far, after all?
You wouldn’t borrow money from your teenager. You wouldn’t date your patient if you were a shrink. You wouldn’t take orders from your UPS guy. You already get this principle, you’re just not applying it because no one ever showed you how it works in a family business. Want to learn more? See if you qualify for a free consult with me for you and your family members. Or check out the free trial of my problem-solving course to learn to see root causes like this.