Let’s be frank, your family dynamic (i.e. your parents and your siblings) is the source of your most complicated emotional dynamics. So when it comes to a family-run business, the decision-making process can be gut-wrenching and complicated. What’s more, the implications of any big decisions will have a lasting effect on the people you love the most. Things like: who should be the next CEO – my son or my daughter? Should we buy out our aunt, and what will that mean for our relationship? These are all big questions that are bound to come up sooner or later. So what is the best way to manage the challenges of a family-run business?
What are the challenges?
The core issue is that in a family business, decisions are not made about the business alone. They are also made in the name of relationships. Families are complex, and so many additional factors and internal politics will operate between the shareholders. The following areas are the key challenges facing family businesses:
- The first problem arises when stakeholders have differing visions, either for the company or for themselves as individuals.
- If there is any unresolved family tension in the mix, this will enter the boardroom.
- “Silent disagreements” occur when personal issues have yet to be aired, and they are either consciously or unconsciously played out in boardroom power struggles.
- In direct contrast to this, families can also be overly comfortable with each other, carrying over a relaxed, even careless approach when it comes to making key decisions.
Boundaries make for better business
In the same way that you might have had separate bedrooms while growing up; family members in a family-run business need to have their own territory with clear boundaries. In fact, if family members join forces in business, it is essential that there are very clear boundaries from the outset. These need to be in both writing and in conversation. Everyone needs to be on the same page when it comes to daily operations and executive decision-making.
- This can begin with something as simple as an agreement to not talk over each other in meetings and maintain good etiquette at all times (remember this is not your Sunday dinner table!).
- This is business, so ‘spit-handshakes’ don’t count. Contracts need to be in place, and there needs to be clear communication about all the fine print, roles and rules. That way, everyone knows where they stand at all times.
- It is very important to have outside committees or board members who are not related to the core owners. This will bring in “neutral” voices that can simmer down family tensions.
Have difficult conversations
Nobody likes an awkward moment. And when it comes to family, there can be so many of them. But having courageous open conversations with your family members can make all the difference; to both your business and your family dynamics. When that fails, just as a parent might be called in to mediate playroom struggles, there are trained facilitators who can come into your business to mediate this conflict in a clear and collaborative way.
A business for all generations
When looking at age-old family businesses, it is clear that a well-run family business funnels both decisions and emotions to the right place. These smart business owners ensure that roles are clearly defined, and boundaries are in place. At the end of the day, a little healthy competition never hurt anyone, and as long as it's managed and with clear, open intentions, these things actually better your business. Remember, that your family are ultimately the ones who will root for you and a family-run business can be incredibly successful. So it’s worth your while to put a good amount of energy into building a connected family culture, to watch out for old habits, and at all times remind yourself to “play nicely with the other board members!”