Does Your Business Function Like a Family Business?
Does your business function like a family business even though it’s not? In his Business Journal article, James Lea says that some small businesses share similar characteristics to that of a family run business.
“For example, both the nonfamily family business and the true family business may rely on informal, unstructured decision making processes. Decisions are made exclusively by the senior person in the business.
Decisions may be made opportunistically or under the pressure of a crisis instead of in a timely, strategic fashion. Sometimes there’s not a shred of evidence on the table to help illuminate the issues. Sometimes there’s no decision. The issue is talked about until everyone loses interest and wanders away to keep on doing business as usual.”
Among other shared characteristics might be:
- the lack of a true management structure, and as the business grows nothing is put in place. Record keeping and reporting are often handled only in a crunch.
- interaction between staff is also unstructured and can get off track easily
- accountability at all levels is often soft or non-existent, often just to appease personalities and overlook lack of competence
- lack of a clear succession plan
On the positive side these types of businesses exhibit strong loyalty among the group and to the company.
How to Use Family Business Systems to Resolve Disputes
We already know family businesses are complex and challenging at best. David Gage provides some structure to understanding the systems involved.
In Resolving Disputes in Family Businesses, http://www.smallbusinessadvocate.com/small-business-articles/resolving-disputes-in-family-businesses-2227. David says: “a family business (FB) is really three distinct but intricately related systems. Each system—family, ownership, and business—has certain functions it must fulfill, and where these systems overlap, more opportunities are created for their functions to clash or be confused. Untangling them requires a clear view of how each system works on its own, as well as how they mesh together.”
David offers excellent examples of his systems as well as suggestions for resolving family issues.
What family business stories do you have to share?
Family Business 2
Some family businesses seem to evolve with little problem. Others get caught up in the challenges of resolving dissatisfaction with one of the family. Frequently there is a difference in age, a difference in motivation and a difference in vision. In a regular business if there is not a mesh, it’s much easier to terminate the relationship. In a family business, family will always be family. Other considerations are at stake.
Sometimes people try to get the family member to change. James Lea has a blog article about some of the challenges of working toward change in a family business.
He says,
First is the honest recognition that change is needed now. The classic ostrich posture may be comfortable, but it’s unattractive and unproductive.
The second is courage. Change is often scary. Also, almost no one wants to accept change that cuts across the grain of his preferences and pleasures, so sometimes change must be driven into place.
Third is a willingness to change — to give up familiar, if only marginally effective, ways of running the business and relating to the family — to make room for something new, different and better.
I have a client whose father started the business and is still involved even though he doesn’t take a salary and is starting to fail. According to my client the only thing keeping him going is his involvement in the business. He lost his wife several years ago and this is all he has. She cannot take the job he’s doing away from him. But she can pick up the parts that he’s starting to fall down on. Little by little he will have less and less responsibility, but will still be involved.
In this case change cannot be forced, it must be directed over time, sometimes without necessarily having agreement.