Some of the most notable companies in the United States have started as a family business and even remain a family business after several decades. For example, Wal-Mart, Ford Motor, Motorola, Tyson Foods, Mars Candy, Gap, SC Johnson and our very own Publix were either started or still remain a family controlled company. There is no doubt that family businesses can turn into tremendous successes but there are many unique factors that must be adhered to in order to ensure its success. The biggest challenge is keeping family members/business partners focused on the success of the business avoiding operational differences and family feuds.
This past week I met with two brothers that are second-generation owners of their family’s business. At the beginning of our meeting, I heard a wonderful story about a business that was set up approximately 30 years ago by their father who had worked tirelessly in order to develop a service business, which he dreamed one day would be taken over by his children. Deep down this man’s goal was to leave a legacy for his family and so he grew the business in a way so that it could achieve that purpose. The father succeeded in his task and his two sons took over the business both at fairly young ages. Over the years both sons’ duties and responsibilities had grown to where they both equally were running the show. Unfortunately, my meeting was related to the new troubled times that the business was experiencing due to the conflict related to the future vision and direction of the company as well as their own personality and management styles. My role was to create a way for one brother to sell his stake in the business to the other brother and go their separate ways.
This incident provides me the opportunity to address some crucial tips to consider when participating in a family business. Overall, I believe that the most important tip is being organized and making sure everything is in writing. Make sure that the business possesses a distinct mission statement, a specific strategic plan, along with a written policy and procedures manual so that there is an answer for any and all issues that may arise. The goal should always be to have all of the family members on board with the rules and procedures of the Company so that there is a definitive guide for resolving any problems, disputes or to make critical decisions. It is equally imperative to include these types of provisions in a comprehensive shareholders or operating agreement along with a well developed buy-sell provision that dictates what to do in the event that a family member wants out.
The second type of important advice I suggest is what I call, the psychological aspects of running a family business. Make sure that all family members have distinct roles; they are giving 110%; and that all family members are equally pulling their weight in the business. Family members must treat each other with respect and not take each other for granted (easier said then done). All co-workers, family or not, must be treated equally in business. Know when it is time to have your business hat on as the CEO, CFO or Sales Manager and when it’s time to have your family member hat on as mother, father, brother, sister, uncle, aunt or cousin.
Finally, make sure that you schedule time away from the business which may also mean time away from family members to clear your head and recharge your batteries. There is an inherent risk in eating, sleeping and breathing with your co-workers, i.e. family members, 24 hours a day. Periodically you need to take a break and give yourself some time to change your atmosphere and activities in order to keep an open mind and possess an open attitude with your family/business partners.