Running a Family Business: Preventing Relationships from Becoming Rivalries

Deciding to start up a family owned business means you will also be in the “business” of maintaining relationships. If you ignore this role, then your family relationships could quickly become family rivalries, and as these connections disintegrate, so will your business.

This is part 2 in a Frugal Family Business Series

Many articles have been written about how the owners of family-run businesses manage to balance their personal and professional relationships. Typically, this articles are peppered with the personal accounts of those who made it work, and those who just couldn’t.

But underneath all the stories and business tips, the most important takeaway is often overlooked: the truth is that each family is unique. Some families are cut out to run a business together, and other families just aren’t. It doesn’t matter how much help they receive.

It may feel like your sister is one of your best friends, but that doesn’t mean you’ll be able to work along-side her, and it may seem so logical to just help out your spouse, to combine your talents, expertise, and time, and run his or her business together as a couple. But your “logic” may not be taking into consideration working styles and personalities that won’t go together in a business partnership. You may also be underestimating the strain such an arrangement will put on your “personal partnership.”

And it almost goes without saying that where several family members will be involved in a business venture, then the question of if it can even work out becomes proportionally stronger. In my previous post on family business, I mentioned the importance of planning and open discussion among those family members who will be involved in the business. This is a vital first step, but there are several aspects to this initial movement. The following are some considerations family members should have before joining together to start a business:

Be open to the fact that it might not work out. This is not a cop-out; it’s not being pessimistic; it’s just being real. If you can avoid a family business disaster, then you’ve made a successful business decision. Any former family business owners who have suffered the gut-wrenching, emotionally-charged process of dividing assets and ownership after the business has been started will tell you that.

You also don’t want to kill a good business idea solely because you are working with the wrong people. With some deliberation you may come to the conclusion that you need to bring non-family members on board to make it work or have involved family members play passive roles. If you are unsure about what to do at the start, then at least you can create a setup that will easily allow others to come in should the family ownership model not work out.

Creating clear job descriptions and roles. You should also make it a point to clearly define and, yes, title the roles and responsibilities each family member will have. This is Human Resources 101, and does not fall away if you are working with your husband or wife. It also may help to ensure that family members receive compensation and decision-making abilities in accordance with their input. If your spouse is helping you with administrative duties or sales, then make sure there is a title associated with that.

Bring in a third party as a mediator. In a normal relationship there will be disagreements. It doesn’t matter if that relationship is with a family member, a close friend, or a non-related co-worker. But with family members you will be handling those disagreements amid a sea of emotional strings. Past, present, and future emotional baggage has the potential to ignite even small, “routine” disputes. That said, it is vital that family members have an objective third party involved to help facilitate any disagreements that may get out of hand. Whether you choose to use a professional mediator or involve an acquaintance, all family members must agree to send their grievances and issues to this person.

Planning time away from each other. If you read enough personal accounts of family business owners, the one thing that is true in almost every case is the need to separate. It doesn’t matter how cohesive the family is, if they don’t spend any time away from each other, then it doesn’t work. Make sure that all involved family members have the space and freedom to step away from the business and spend time with other people, doing other things.

Balancing business and personal time. There has to be some separation within your family relationships as well. Balancing time spent working on and in the business versus time spent doing and talking about other things is vital- though this point of balance may vary from family to family. Some families only “talk shop” in formal business meetings, others may successfully allow for some overlap. The main point here is that relationships have to be maintained- even family ones that we can’t change. If you let these connections languish then both they and your business will suffer.

Hiring non-family employees. Finally, you may want to consider bringing in to your family-run company some people who are not related. These employees can help to cut tension, encourage focus, can bring in a fresh perspective, experience, skills, or ideas. Just make sure you think through some of the ramifications of hiring non-family employees (more about this in my next post).

In short, before you jump right in with a family-owned business, you need to spend some time fleshing out the plans for how it will all come together. You don’t want to build your business at the expense of your closest relationships. In the end, you may lose both.