You have established your company through unwavering determination and sheer will power. You have moved beyond the startup mode into a thriving successful business. As your company matures and grows, so does your family. At some point, it is likely you will be confronted with the decision to hire a family member. Candidates may include spouses, children, siblings, in-laws, and family friends. In the interest of full disclosure, I was a boss’s son in the family business. And now for the “Good” the “Bad” and the “Ugly”.
The “good” being that the family business gave me a ten year head start on learning the business. I got to do more quickly and learn at the elbow of my father. This greatly accelerated my learning curve and provided me opportunities that were not available to my co-workers.
The “bad”. It changed but expanded my relationship with my father. No longer were we just father and son. We now saw each other both through the eyes of the family and business. While we tried not to talk business in a family setting, it was almost impossible. It not only changes the father/son dynamic, but also influenced my relationship with my siblings.
The “ugly”. For me it worked out. I give most of the credit to my father. He gave me enough rope to learn but not enough to hang myself. Over time as my role increased he gave me the room to make my own decisions even if he would have chosen differently.
However, others have not been so lucky. In my banking days, I saw several family businesses suffer from a domineering family patriarch that was not able to share or teach and ruled with an iron fist. In other instances, I saw a son or daughter that was in over their head and did not know how to transition to their passion outside the family business gracefully.
Based on my observations and experience here are some of the lessons I have learned.
1. The Thanksgiving Test
One of our definitions of success was always being able to sit down at the family table for Thanksgiving. We were able to combine a family and business life that allowed this to happen. However, some families have not and it is a very big price to pay.
2. Learn on Someone Else’s Nickel
As a new employee fresh out of school, we often make mistakes. Everything from getting to work on time, to defining your own work ethic. In addition, the intangibles and the business lessons learned from other organizations will have tremendous value. For me, a four year stint in the banking industry gave me a great skill set to contribute to the family business.
3. Being The Boss’ Kid Makes You Different
Your work ethic, personality and capabilities will impact how you are viewed, but you will never be one of the gang. As a family member you have tremendous opportunities, but it can also be lonely.
4. Start At The Bottom
Even if you move through the ranks quickly, it is important for family members to know the organization well. Lead by example and no job is too big or too small. The relationships you build with the team will be critical to your future success.
Why Do It?
As the patriarch and business leader it is important to recognize that you will give more than you get for some time. Be patient. As the leader it is our responsibility to anticipate and plan for the future. When you initiate a planned succession or a tragic event creates change in leadership, having several good options is a blessing. Some options may include the following:
1. Close The Doors: While this may seem simple and straight forward, there are many loose ends to consider. How and who will take care of the current customers, employees, accounts receivable, suppliers, and tax obligations? If you are still in the leadership role the likelihood of a smooth closing is possible. If not, a crash landing with significant carnage may result.
2. Sell To A Financial Buyer: Often this may be a competitor or financial investor. This solution could significantly impact your customers, employees, suppliers and business’ legacy. How do these relationships and outcomes impact your definition of success?
3. Family Asset: Your Company is generating a quality of life that allows you and your family to live very nicely. Cashing out may seem short sighted and wasting an opportunity for future generations to benefit from this family asset. If the family talent is not available today, a professional manager may provide the needed expertise while leaving options for younger family members.
4. Selling To The Family Or Employees: Creating and nurturing the next leadership team involves passing on the institutional knowledge and business savvy you have developed throughout your career. With your hand picked team and having evaluated each member’s ability and will to lead, you can feel comfortable leaving your customers, suppliers, employees, and legacy in good hands.
When planning for the future it is important to create a number of options that you can test and pick from at the appointed time. Change is constant and what looks like the best path today may not be the desired outcome tomorrow.