According to the US Census Bureau, about 90% of businesses are family- owned or controlled. A family business, by definition, is any business in which two or more family members are involved and majority of ownership or control lies within the family. Family businesses are huge companies such as Walmart, Ford Motor Company, Berkshire Hathaway, and Anheuser Busch as well as smaller, local companies. Among the the family businesses in the Denham Springs area are Big Mike’s Sports Bar and Grill, Farrell-Calhoun Paint Company, Jake’s on the Avenue, Holmes Building Material, Sport N Center, Rotolo’s Pizzeria, Randazzo’s Italian Market, Rhino Electric, LeAnn’s Flooring by Design, Maria’s Mexican Restaurant, Livingston Parish News, Kennedy Mechanical Services, and SR Enterprises.
Among the most common family businesses are restaurants and retail shops. Some people started working in the family business at an incredibly young age, others migrated to the business when they needed work, or the business needed workers. Staying one big happy family when working together can be a challenge, and there are at least 21 classic challenges to a family business. Often, the founder is a parent or grandparent who has little or no business experience but has a strong desire to open a business. Some family businesses have started as a way of employing teens in a big family such as an ice cream store or a snow cone stand. When heads of family businesses have little or no business experience, things don’t always go according to plan. A lack of marketing skills might mean that the business is going to have difficulty getting customers. An unfamiliarity with finance could mean disaster unless the founder is smart enough to hire a good accountant who can help them to manage the profit and loss statement.
There is an old joke which says, “My family put the fun in dysfunctional.” If the family dynamic is dysfunctional, the business will have problems. What follows are a list of some of the most common challenges family businesses face:
•Emotions – Emotional challenges can create problems in the daily operation of a business. When an in-law is a critical member of the team and a divorce occurs, the business can lose a key employee. Substance abuse and addiction of a family member can also wreak havoc in a family business.
•Failure to plan – Companies need a long-term strategy to guide their success through periods of rapid growth and economic downturns. Without a strategy a company may face a lack of resiliency which can result in missed opportunities.
•Lack of Structure – Clear policies and procedures are critical to ensure that work is done correctly, timely, and economically. If everyone is performing their tasks in whatever way they want, the company will flounder and fail.
•Role confusion – Role delineation identifies who is responsible for what tasks and duties. It is critical to success because it creates accountability for key aspects of daily operations.
•Lack of shared values and mission – When the entire team is not aligned with the company’s values and mission, it is much like four people in a boat all rowing in a different direction. The company will not get where it is going.
•Lack of accountability, equity, and oversight – When one family member feels they are working harder and longer hours than another, or certain family members are getting special treatment, resentment can grow into bitterness, anger, and a desire for revenge. In fact, this can also occur among non-family employees when a family member is not held accountable or is allowed special privileges.
•Failure to create a succession plan – In ancient times, the oldest son was the heir, end of story. The truth is that birth order does not ensure ability, aptitude, talent, or skill. When the wrong person takes the helm in the second generation, the loss of the first generation’s success is nearly guaranteed and can be especially tragic.
Here is a checklist to help you determine the health of your business. It is valid even if your business is not a family business. Check off the ones that you believe your business has accomplished.
The people in our business hold their emotions in check. People communicate when there is a problem rather than stew in resentment.
Everyone is held to a high standard of professionalism.
We have clear policies and procedures that govern our business, and everyone is held accountable to abide by them.
Our leadership and our staff share a vision that is clearly defined. We all know where our company is going and how we are doing.
We have a strategic plan guiding us into the next 3-5 years and meet regularly to ensure we are on target and modify it as needed.
Everyone in our company understands our core values and strives to operate by them.
No one can run amok. If someone fails to do their job or creates a disruptive work environment, it is addressed quickly.
When needed, we take the advice of external coaches and consultants from outside the family to ensure we maintain a healthy perspective on our business.
Everyone here clearly knows not only what their own responsibilities are, but also knows the responsibilities of others.
All our employees are engaged and accountable to their roles and responsibilities. Everyone is always ready to help a coworker, but unless asked, we all stay in our lane.
If something were to happen to our CEO, or any other key employees, we have a plan as to how we will continue successful operation, and everyone knows the plan and their role.
We explore the best path to get the result we need rather than just do what we have always done.
Did you get a perfect score? For most companies, at least 2 or more of these factors have room for improvement. Working with a coach, skilled in family businesses, can help you identify areas where your company can be stronger, and help ensure that your company is not just around for the first or second generation but remains strong even through the third generation and beyond.
For an assessment of 21 Challenges of a Family Business, email Cami at the address below with “Family Business” in the title.
Cami Miller is a business coach and works with executives, entrepreneurs, and family businesses developing strategies for success. She can be reached at firstname.lastname@example.org