Family, Business, or Family Business?

I love working with family businesses. The very challenge of it will make inexperienced consultants lose their nerve (or should). Not only do you have the challenges of running a profitable business, but you also have the challenges of preserving incredibly valuable family relationships. When things go well, though, it makes success all the sweeter. 

I have a strong bias that, in terms of long term happiness, family relationships are much more important than business relationships. Therefore, it’s always a darned shame when I see people in family businesses damage their family relationships over money. After all, there are a multitude of ways to make a buck, but you only have one family. 

The good news is that you don’t need to choose between these kinds of relationships–you can be successful in both. However, this makes it necessary that you be skilled at both and that you be clear on what constitutes success in both. 

Let’s say you’re the owner of a small but growing business and you bring in your brother to be head of your sales department. You believe that he is intelligent, hardworking, trustworthy, and a great salesperson, so the decision seems to be a sound one. 

Now you need to negotiate the potential land mine of role conflict. As a sibling, your role is to love and support your brother to the best of your ability through thick and thin, and you have equal power in the relationship. As a business owner and supervisor, your role is to hold your brother accountable for performing a job in your organization, and you have more power than he does in the relationship. 

If you’re not comfortable with these different relationships and expectations, then see if you can figure a way to get comfortable with them. Otherwise you’re better off not going down this road at all–just continue to nurture those important family relationships and let family members find a different way to make money.  

Believe it or not, sometimes people confuse love and money (have you watched any soap operas lately?). The primary reason they confuse them is guilt. 

For example, if your mythical brother thinks he deserves more money, and you don’t think he’s earned it fairly through his contribution to the business, then you need to tell him so. If you give him the money anyhow out of guilt (maybe you were mean to him when he was a little tyke?), then sooner or later everyone else in the business will know that he is receiving an unfair advantage and they will cease to give you their best.

After all, if your business doesn’t have a culture which rewards contribution to the organization (a “meritocracy”), can you blame your employees for not giving their best effort? What’s in it for them to go the extra mile? And wouldn’t you feel the same way if you were in their shoes?

If you’re going to mix family and business relationships, then make sure you’re doing a good job with both to reap the full personal and financial rewards. And then, how sweet it is…  

High-performance habits

  1. Be aware of the potential role conflict between family relationships and business relationships.
  2. If you choose to combine these two relationships, then keep both unambiguous and win-win.
  3. Don’t let business relationships damage your valuable family relationships.
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