The Contradiction: Family vs. Business
The term “Family Business” is contradictory. Family is about unconditional acceptance, while business is about conditional performance. In my experience of over 50 years in succession planning with family businesses, most are imbalanced towards either family or business.
Family-Focused Imbalance: A Risky Approach
When family is the main focus, decisions are often made to make family members feel good, resulting in premature promotions, excessive pay, and cutting corners on training and time off. Unfortunately, this approach can hinder your child’s ability to earn respect, a critical element for business succession success.
Business-Focused Imbalance: Sacrificing Family for Success
On the other hand, when business is the primary focus, the family’s needs may be sacrificed for the sake of the business. This can lead to resentment among family members who feel neglected, often prompting children to distance themselves from the family business, putting business succession planning at risk.
At The Rawls Group, we believe that “there is no business gain worth a family loss.” Money can always be made, but relationships are not easily repaired. While focusing more on family than business might seem ideal, structuring the development of successor children so that they have to earn their positions is crucial for successful succession.
The Challenge: Balancing Expectations
Why does a focus on a family challenge succession? The American parental dream is to give children a better life than their parents had, creating a disconnect when parents talk about the sacrifices made to build their businesses. Balancing the desire for success with family expectations is a delicate task.
The Balancing Act: Keys to Success
Balancing family and business can be challenging, but those who succeed have common strategies:
- Prioritizing Family Time: Successful individuals prioritize and protect family time despite busy schedules.
- Earning Their Place: Family members must earn their place in the family business, taking the stairs instead of the elevator to the top.
- Clear Development Plans: A clear plan for developing children working in the business is communicated, outlining expectations and long-term goals.
- Regular Business Updates: Business updates are regularly shared through a forum like the Family Business Council, allowing children to understand the business’s impact on the community.
Navigating Challenges: The Road to Success
Navigating the challenges of family and business is difficult but rewarding. Trusted advisors play a crucial role in defusing conflicts, clarifying issues, and guiding the way. Striking the balance that brings business success and family harmony is rare but incredibly valuable. One client said, “Watching my children succeed in my business is the greatest joy of my life!” That’s a goal worth pursuing.
The article was originally published in Digital Dealer: Successfully Navigating the Landmines of Family & Business: The Keys to Exceptional Rewards.