Is Your Family Business Making these Common Mistakes?

Owning a family business can have some great benefits. For example, you already know the strengths and weaknesses of employees (no surprises), you can cut a lot of red tape to get things done, you can usually count on family to be loyal when things are tough, and you can communicate more openly (even if it falls into a familiar pattern of raised voices.) 

But let’s be clear; while there are special benefits, there are also challenges unique to family-owned and operated businesses. In my work I have found that most family business problems are much more about the FAMILY than the BUSINESS and inevitably involve human behavior and relationship issues rather than technical or money issues. Problems are almost always caused by family members making one or more of the top five mistakes common to family businesses. But first, let’s start at the root of the problem…

Are you a FAMILY Business or a Family BUSINESS? 

According to Quentin Fleming, author of the book Keep the Family Baggage Out of the Family Business, there are always two completely different and distinct systems involved in a family business: the family system and the business system.  Every family is a system unto itself, with hierarchies, interpersonal styles, unspoken rules and customary ways of doing things. Family systems are emotionally driven, inward looking and don’t like change. Business systems are task-driven, outward-looking and embrace the necessity of change. Herein lies the problem: Running a business is different from raising a family, and a lot of owners have serious problems when they don’t separate the two systems. The solution is to shift from a FAMILY mindset to a BUSINESS mindset. The business must be run like a business, and this means applying effective business strategies, just as you would if you weren’t related to the rest of the team.

The fact of life you can’t avoid in either system is the involvement of people – human beings with different strengths, maturity levels, quirks, attitudes and baggage. Under stress, people often react to their baggage, not to the actual situation. So when a family works together whatever “baggage” they carry – tensions, quarrels, jealousies, and rivalries – comes with them. The impact of family baggage in a family business is the unacknowledged root cause of almost every problem affecting it.

One key to preventing the two systems from consistently colliding is to be aware of the baggage, rules, roles, and values that exist in the family system – even healthy family systems – and resolve or modify as appropriate so the business system is not dominated by them.

To be successful in any business endeavor is difficult and challenging.  When you add the family roles, history and baggage it is even more difficult and that is what often leads to the common mistakes we are going to consider in the next couple of weeks.

Until then,

Live, Work and Relate Well!

Dr. Todd