FAMILY BUSINESS NEWS

Mixing Family and Business – The Good, The Bad and The Ugly

January 2020 | Volume VII

“Mixing Business with Family,” not always defined in the same light as “Mixing Family with Business,” is something facing most entrepreneurs. Where do I draw the line that differentiates these two? It is quite simple, actually.

Mixing Business With Family

Mixing business with family is defined as an entrepreneur who inevitably, whether by his/her volition or out of necessity, brings the business home – everyday – as they live and breathe and sweat that business. Every member of their immediate family, and even some not so immediate, lives vicariously through the entrepreneur as he/she conceptualizes, builds, and runs the business. This assumes that the entrepreneur cannot leave the business at the business and “turn off” when they leave. Have you ever met a successful entrepreneur who doesn’t have the business in the brain, no matter where they are? No matter what time of day? Inventor-disrupter-entrepreneur Elon Musk tweeted, “nobody ever changed the world on 40 hours a week”. When pressed to explain what is the ‘correct’ amount of work in a week required to change the world, he replied:

“Varies per person, but about 80 sustained, peeking above 100 at times. Pain level increase exponentially above 80”.

– Elon Musk

Try not to bring that home with you! 

Mixing Family With Business

On the other hand, mixing family with business is a choice we make as a 1st generation entrepreneur. We decide to bring family members into the business, sometimes out of solid rationalization, sometimes out of guilt, sometimes out of pressure, sometimes just as cheap laborand sometimes just because it’s an in-law.  However, rarely is it out of one hundred percent logic. Don’t get me wrong, I am not saying it is a bad decision – its just fraught with many different problems that working with third parties helps to avoid:  family squabbles; sleeping on the couch; cutting family dinner short (if at all); and don’t get an entrepreneur started on divorce – ever been stuck with a brother-in-law in the business after a divorce? They hope you never do. But working with family can also be rewarding – unquestionable loyalty, another set of eyes in the business watching out for the family, honesty, etc.

Related: Questions Family Businesses Need to Ask Before Transition

But I digress…   Where were we? Building a business as an entrepreneur has challenges that the whole family will endure. What we often forget in that psychology and family dynamics play a huge role in the success of an entrepreneur. Managing employees and partners who are family is very different from managing unrelated employees and partners. The patriarch and/or the matriarch of the family, if also the president and chief employer of the family, must always balance what is right for the business – and the family. Which is more important? Which takes more time and energy? Where does the business end and the family begin? The answer is simple – no one really knows. Each case is different, just as each family is different  

However, there is one constant – understanding and listening, and taking into account all facets, not just one of the other, will help that trusted, outside adviser muddle through the murky waters each family faces. As a consultant, one cannot walk into a family business with textbook knowledge, a checklist of questions, and a briefcase full of precedent, case studies, nor previous solutions.

Our job, as a trusted advisor, is to take a step back and listen – to goals and objectives of the business AND to those of the family. Help determine where one ends, and the other begins – if at all possible…  What type of business have you built? Do you cherish lifestyle (cash flow) or value/asset building Not all decisions in a family business are one-hundred percent business-driven. If not, what are the consequences? Pruning the family tree (firing a family member) may have repercussions that reverberate wide and large, causing deep family crevices in the family dynamics, that may not be mendable. Family decisions have business consequences, and business decisions have family consequences.

For those that master the delicate balance of family and business, the measurement of success is far more satisfying than business alone – but the risks, unlike business only, are significantly less black and white, yet in some cases immeasurable…and unavoidable.

Anyone advising the family business must “live it” with the family – as no one can understand a family business unless they understand the family. In a true family business, they are inseparable. As a family business owner, make sure your advisors are prepared to live it with you.  

A truly successful family business is rewarding to all who dare participate – us included. 

If you want to know more about family businesses, how to manage tangible such as tax and estate planning
and the not so tangible family dynamics, please contact us or subscribe to our Newsletter.

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