Have you ever been a part of a family-owned business? Not necessarily part of the family but working for, with, or involved on some level as an employee, vendor, customer, or yes, even a member of the family? If you have, think about the dynamics of how the business and the family relationships and roles affected each other. Parents, siblings, grandparents, aunts, uncles, cousins, in-laws, all having dual roles – the family role generally influence the success of the business role – manager, president, accountant, lawyer, and so on.


Family-owned (and run) businesses are usually strengthened and challenged by the dynamics of the familial ties. If the business hierarchy resembles the family hierarchy, grandma, grandpa, mom or dad make the rules and everyone jumps to them – regardless of the education, expertise or credentials of the “kids”. Uncle Harry’s the younger brother or the “baby” of the family and can have all the wonderful insights and ideas about how things can be, but no one listens or takes him seriously because of his “hierarchy” in the family.


Perhaps the business is being run by the son. He is the one with business know-how and experience. The problem is Mom and Dad just don’t perform the roles they are in. Mom is supposed to be out generating leads and selling product. Dad is in charge of the bookkeeping. Dad is on the golf course with his buddies and Mom is at the spa. What is a son to do?


The challenge of separating the business role and expectations from the family relationship is an ongoing one. When everything is working and profits are rolling in, the family ties that bind also strengthen and reinforce the business. When an enterprise is new or struggling, the ties that bind, REALLY BIND!


Family-owned businesses founded and handed down from generation to generation – those which are successful – find success in leveraging the relationships and translating the discipline of commitment to the family, hard work, and working in the business as a means of passing on the “success gene” from generation to generation. Rarely would a company with a history of success hand over control to an inexperienced or unqualified CEO. If you wouldn’t put your livelihood in the hands of a non-family member who isn’t qualified, why does being “related” change the decision?


First generation family-owned businesses are quite common success stories. Successful multi-generational inherited family-owned businesses are less common. Why? Several factors come into play:


ÿ      Expectation and entitlement – I’m going to inherit anyway, so why do the work.

ÿ      Expertise and experience – Aren’t things that can be passed on they must be developed

ÿ      Relationships and reputation – Founders frequently succeed because of the relationships that evolve and the reputation that is built with product, service, technology, credentials…these are things that take time to build…leveraging these items requires the commitment to rise to that same level and gain your own reputation

ÿ      Learning curves and culture – so much was learned in the trenches of doing and building the business that it becomes second nature, the next generation must be taught and given the opportunity to learn the lessons BEFORE the changing of the guards…Also, the organization that is inherited, well frequently the 30 year veteran employees of the company may remember the “kid” in diapers and gaining credibility and influence is as much a personal challenge as it is for the founders to set the tone for the organization.

ÿ      Technical and business expertise – are not the same. The next generation of family may be scientific or computer or medical or any type of “wunderkind” but not have the business acumen to keep things going. Recognizing that having a leadership role doesn’t mean running the day-to-day operations may preserve family and business relationships – as well as the profitability of the business.


Think about well-known “family businesses.” How many can you name that are multi-generational success stories? How many generations do they span? S.C. Johnson & Company, Perdue Chicken, Ford Motor Company, Forbes…Yes some of these are publicly traded, but they are still very much family owned.   Ford Motor Company has its third generation in the leadership role. As this generation of Fords grew up, it was “known” that one of them would be Chairman and CEO. Which one and when were the only questions. What does that expectation mean for a business and for the “development” of experience? If your name is on the front of the building, how does the internal organizational culture work on putting you through the paces and providing meaningful feedback? Would you want to be the manager or supervisor who holds the heir apparent accountable? Would the tasks you assign be the same? Would you truly be able to treat family members the same way you treat “outsiders”?


Well the answers to those questions depend upon the culture of the company as built and as acted upon by the founders. If the “kids” get special rules and handling, care and treatment, then no matter what is said in the policy manual, it is the practice that dictates. If no one will argue with Mom, or the two brothers have their areas of expertise and never, ever, interfere with each other…if no one in the organization will communicate the realities of day to day operations…then get ready for the business to die a slow death when it is passed on to the next generation.


When the discipline of business and accountability are reinforced by the bonds of family, then success gains momentum. When the ties of family circumvent the practicalities of business, then success is bound, constrained, and becomes beyond grasp. Family-owned businesses to succeed or to perpetuate success must be able to use relationships to reinforce the strengths of the organization and overcome weaknesses. They also must be able to develop the necessary skills and exgains momentum. When the ties of family circumvent the practicalities of business, then success is bound, constrained and becomes beyond grasp. To succeed or to perpetuate success, family-owned businesses must be able to use relationships to reinforce the strengths of the organization and overcome weaknesses. They must be able to develop or acquire the skills and experience necessary to achieve continued results. It isn’t in the best interests of the family or the business to let relationships become a handicap rather than an asset.



© 2006 F.O.C.U.S. Resource, Inc.

Verified by ExactMetrics