Business Families and Family's Business

Tips for Greater Harmony and Success

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By Debi Sanderson

I’ve always admired family businesses and actually operated a cottage industry business with my parents in my early 20’s. We survived in tact and looking back I’d say it deepened our relationship.

I’ve since learned about 80% of all businesses in Canada are family-owned, they represent 60% of our GDP[1], and employ about 6 million Canadians. Family businesses are a major driver of our economic engine.

There’s a myriad of articles and studies sharing insights into the challenges and rewards of running family businesses. We have some enormous success stories in Canada (Canadian Tire, Molson Coors, Bombardier, McCain Foods), yet the prospects for multi-generational success are dim: 30% survive to the second generation, 12% to the third and a thin 3% into the fourth[2]. Further, some of these mammoth success stories have suffered destabilizing conflict and fractured relationships.

Even if building your family business into a multi-generational, billion-dollar empire is a distant aspiration, achieving business success while preserving family harmony is a safe universal bet. Here are some tips to help you succeed:

1. Operate the business like a business.

Plan: Your business goals and strategies may seem obvious, but it’s important to formalize these goals and create a strategic plan for how to get there. Having documented goals and a plan to refer to will provide valuable clarity when inevitable disagreements arise.

Earn your roles and hold yourself accountable for results: it does not set up the business or individual for success when family employees are given roles they are not qualified for or suited to. Similarly, relatives who would otherwise be recruited by outside employers are often overlooked or unduly held back, perhaps due to lingering paradigms or over-sensitivity to perceived nepotism. A structured approach to staffing your business will help:

  • Create a 12 – 18-month organizational structure that supports your strategic plan
  • Identify key roles – what skills and experience do you need to execute your strategies and meet your goals?
  • Create job descriptions. Be clear about what you’d expect a seasoned, qualified candidate to do.
  • Assess family and non-family candidates equally and make sure the staffing decision is rooted in business factors. Be realistic about the skills and interests of your relatives. Involve external advisors if necessary.
  • If the business is comprised mainly of relatives and there’s a qualification gap, consider hiring coaches or consultants who can bring important expertise and accelerate the learning curve.

Regularly assess results: evaluate progress against goals and hold each other accountable for results. Reporting to mom is no reason to be casual or sloppy in your responsibilities. Similarly, expect the same outputs from your children as you would a non-family employee – don’t accept mediocrity and don’t be unduly demanding.

Set up an advisory board: if you don’t have one, consider assembling a group of trusted external advisors who can provide objective guidance and serve as a sounding board.

2. Communicate Professionally:

This is a particular hotbed for family businesses: unresolved issues, past hurts and entrenched communication patterns can breed conflict at work. Family members may feel ‘stuck’ - walking away or terminating the employment relationship may not seem like an option. Otherwise-normal management decisions can be laced with emotion and trigger out-sized reactions or conflict avoidance, to the detriment of the business.

Consider the following:

  • Use first names in place of family terms, especially in front of other employees
  • When you walk through each door, leave your ‘other self’ behind. Set up a time to work through unresolved issues from home and don’t let them seep into work. Intense discussions are particularly uncomfortable for non-family employees to witness.
  • Talk through family dynamics and agree to ground rules – if Dad is CEO, treat him accordingly. Dad, if you are CEO, be sure you give your reporting family members the same scope, authority and consideration of ideas as you would non-family managers.
  • Decide early that the employment relationship has to make sense for both parties. Release each other from obligations to stay involved if it’s not working or is creating misery.
  • Provide positive feedback and show appreciation to one another.

3. Create a Succession Plan:

less than a third of family businesses have a succession plan in place. If you know the business will be carried on by relatives when you retire, it’s important to put a formal business succession plan in place well in advance. In addition to important financial and tax considerations, a succession plan will address critical matters upfront such as ownership structures, who will run the business and how the transition should unfold. Consider an external advisor to help you think through the issues and make decisions in the best interest of the business and the family. Be sure to keep the plan current as the business grows.

According to one study[3], there are several other key business management activities, that when adopted, drive success including a propensity for continuous learning and the engagement of professional business advisors. If you are interested in taking your family business to the next level, contact our team of professionals at BNG Bossy Nagy Group to help guide your way.

[1]GoForth Institute: 6 Facts about Canadian Family Businesses, S. Garner, 2015

[2]Entrepreneur Magazine: The Frequently Fatal Family Business Flaw: Denial, Dan Scouler, 2014

[3] Agri-food Management Institute: Dollars and Sense; Measuring the Tangible Impacts of Beneficial Business Practices on Canadian Farms, 2015

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