If you own or manage a family business, you’re in good company. Family businesses are a major part of the United States economy. Eighty percent or more of all businesses in the United States are family controlled. Plus, over 60 percent of the U.S. workforce works for a family business. Yes, family businesses embody our country’s entrepreneurial spirit and represent the hopes and dreams of many for independence, community, self-sufficiency, and wealth. Unfortunately, says Edward Hess, author of The Successful Family Business: A Proactive Plan for Managing the Family and the Business, family business owners also face challenges that other types of businesses don’t.
“The added complexity of family dynamics causes most family businesses to operate, to adopt strategies, and to make decisions differently from non-family businesses,” explains Hess. “Leaders of family businesses must learn the processes and attitudes that are needed to manage the family versus those that are needed to manage the business. You cannot manage both the same way. Families factor family needs, hopes, and fears into their decisions regarding the business, and only family businesses have sibling or cousin rivalries, jealousies, and competition for parental love, approval, and financial favor. Family dynamics, family ways of communicating, and making decisions all can interfere with business decisions. This is the beauty of and challenge of managing a family business.”
Here are seven short leadership lessons from Hess to help you run your family business.
- You cannot manage family business issues in the same style or manner as most entrepreneurs manage their business.
- The process of how family members have input, communicate, debate, and reach consensus is as important as the particular family issue or its specific resolution.
- Family business issues are complex and it takes time for people to get comfortable – time for people to understand other people’s perspectives and time for people to reach consensus.
- Proactive and preemptive management of family business issues is better than reactive management. Proactively dealing with upcoming issues can mitigate uneducated opinions, anger, jealousies, and greed.
- Values such as respect, integrity, fairness, love, and stewardship are the foundation of reaching results that are in the best long-term interests of both the business and the family.
- Caring, respectful listening is more important than a quick answer or a quick solution. In most cases, there are deeper family issues that need to be addressed, considered, and factored into the equation.
- The fundamental overriding principles of managing a multi-generational family business are: a) Transparency, b) Inclusiveness, c) Consistency, d) Fairness