Some small business owners dream of creating a “family business,” that is having one or more other family members actively engaged in running the business. It’s a romantic notion and very compelling to some . . . Mom keeps the books, Sis and Little Johnny do a variety of chores around the place, and Dad leads the whole happy parade. Ah yes, Americana at its best. But is that a realistic vision? Or is it just a pleasant passing thought that shouldn’t be taken seriously? If you are considering bringing a relative into your business, or have thought about it in the past, please read below.
“Have your children go work for someone else before they work for you.”
That was a headline in a recent Daily Herald special section on family businesses, and it’s not a bad thought. But if it were me, I would have left off the “before they work for you” part. If you’re thinking about bringing a relative into your business, I have just three words of advice for you. Don’t do it.
I have spent a career trying (with only limited success) to convince small business owners not to bring relatives into their business. It’s a nice idea, but a nice idea that’s fraught with problems and risks. No doubt there have been (and continue to be) spectacularly successful family businesses, but for every one of those, there are probably ten or more that aren’t so successful. They don’t necessarily fail outright, but they are dysfunctional on some level. It’s just that having relatives involved brings a dynamic to the business that is usually not helpful, rarely necessary, and sometimes even destructive.
Consider the first and most obvious problem. Let’s say you bring your son-in-law into the business. You thought the job you gave him was a good fit for him, but after awhile, it’s obvious the arrangement just isn’t working. So you have no choice. You have to let him go. Suddenly your daughter won’t speak to you and Thanksgiving dinners aren’t much fun anymore.
Or consider how difficult it will be to keep talented people on your team once they realize that the top jobs are always going to go to a family member and that they have the wrong last name for any hope of advancement.
Sibling rivalries are not uncommon in family businesses, and those can have all sorts of unwanted consequences. Then there’s the problem of succession planning. What happens when one sibling learns that another has been anointed the Chosen One to lead the company after the patriarch (or matriarch) steps down?
Relatives may feel privileged, or they may have an inflated sense of their worth or their importance. They will wield power and influence beyond their station (even if they don’t intend to) just because of their relationship to The Boss. The list goes on, but the point is, a business owner with relatives in the business can become trapped between doing what’s best for the company and its customers on one hand, or keeping peace in the family on the other. So why would you want to invite that sort of dilemma on yourself? The best way to avoid business/family conflicts is to keep the business and family separate.
Is my warning too late? Do you already have relatives in the business that are causing some unforeseen problems? Call me. We should talk.