Every family is different and every business is different, so logically every family business will be (at least) doubly different. Family businesses potentially have many advantages, including agility (taking quick decisions), flexibility (being able to do things differently) and being able to tell a story from the heart which means they capture the hearts (and business) of their customers and employees.
Being a family in business together involves complexity, with each family member bringing a different agenda, perspective, personality and skills, underpinned by common familial history and strong emotions. This can be a strength. But where there is light there is also shade – and family businesses may also experience challenges that their nonfamily counterparts do not.
Although every family business is different, there are nevertheless issues that families in business together frequently encounter. We are often asked to help when at least one of the following has arisen.
What issues do family businesses encounter?
Succession
What we mean by succession is transitioning the business from the management and/or ownership of one generation to the next. Some family businesses manage this process perfectly well without the support of a family business consultant or other advisers.
But for some, the process of transition is difficult and painful. Often family businesses can become bogged down in indecision, inertia and conflict. Issues around what is fair and what is best for the business may predominate.
You will have no doubt heard the phrase, ‘shirt sleeves to shirt sleeves in three generations’ and we have found that the transition from second to third generation can be particularly challenging. At this stage, the business has typically reached a reasonable size and so has the family, greatly increasing the complexity of the challenge. However, if a family business can manage this transition, subsequent transitions can be easier for the family to manage.
Governance
Governance does not necessarily involve putting restrictive constraints and paperwork in place. A leading academic described the essence of governance as “bringing the right people together at the right time to discuss the right things.” Fault lines that need some governance attention often show up in family business as:
- challenges with finding a voice for the family who may be growing in number and dissipating both geographically and in other ways;
- creating an appropriate line in the sand for what is a business matter and what is a family matter;
- managing the dynamic between the insiders and the outsiders (by which we mean those who are working in the business and those who are not.)
How do family businesses ensure that their future success is not derailed by these issues? By shining a light on the issues, normalising them (they are common problems) and working together to create a governance framework that works for both their business and family. This takes time and commitment on the part of the family members involved but families often find a renewed sense of harmony, vigour and direction at having faced up to the underlying issues and established a governance framework that works for them.
Conflict management/communication issues
The issues briefly outlined above are a breeding ground for tension and resentment to build.
The other challenge that some families experience is that their family culture is one that doesn’t lend itself to communicating well or openly, particularly on difficult or taboo subjects. Issues that have plagued previous generations, plus the ups and downs of family life can also impact a family’s ability to manage conflict and to communicate effectively.
Almost always, the family businesses we work with are experiencing more than one of the above problems.
The consultant’s role
How can involving a specialist family business consultant help family owned businesses?
Normalising
Part of our role is to normalise what is happening. We often hear from family business members that they feel very alone. They feel that their issues are unique or more extreme than is typical. We can help by reassuring families that what they are experiencing is not out of the ordinary and, in most cases, a product of operating in a very complex system, rather than the fault of the family.
Impartiality
The benefit of impartiality cannot be underestimated. Our clients find that having someone that is acting for the whole system and not just one party or faction of the family is enormously helpful. We offer an opportunity for everyone to be heard and everyone (to the extent they wish to) to join in the process.
Bespoke solutions
Our process means that the family are supported to reach their own decisions on the route forward. No one is imposing a 'one-size-fits-all' solution on them. As we said at the start of this article, every family business is different – and therefore families will come up with their own route forward, which will be bespoke to them.
We share our knowledge and experience of working with countless families over decades. We also share very practical techniques to improve communication amongst family members. Our ultimate goal is to empower a family business to develop the skills to move forward confidently and effectively without us.
The Family Business Consultancy is a specialist consultancy designed to support family businesses with succession, governance, family dynamics issues, next generation engagement and more.
It provides consultancy and mediation services, bespoke education and training to family businesses and their advisors.
