At the beginning of my career, I was involved in a lot of startups. I was starting with nothing – zero, zilch — so I’ve always had a lot of respect for entrepreneurs because you start from an idea and not much else. To be honest, in the beginning, I somewhat discounted my friends who were inheriting family businesses. When they’ve been at it for generations, I thought ‘well, how hard can this be?’
Thing is, the older I get, the more I’ve gotten to know various family offices and family run businesses and now, I’ve come to realize that running a family business is harder. Much harder. It’s a legacy that in some ways can be so overwhelming to continue to build, and not screw up, whereas with startups you have the luxury of low or no expectations.
Compare that with the legacy/obligation/burden handed to the second, third, or fourth generation, and there can be incredible pressure on the business and family to do well. And it’s even harder now, when no business – no sector – is immune to the kind of disruption, to the kind of disintermediation that technology has introduced into every industry and market. Nothing can be taken for granted, regardless of longevity.
Then comes family, which goes beyond the day-to-day mechanics of doing business. Differences in opinion, contrasting styles and personalities, communication issues, varying visions for the future are bound to come into play and can create a host of family business problems. There’s everything from a strained father son relationship in a family business to ethical issues, conflicts amongst members, or inheritance issues.
Solutions to Family Owned Business Problems
There is a joke about a business owner who said, “I went bust two different ways: really slowly and then really quickly”. No one gets a guarantee or a free pass. And things don’t always work out. You try your hardest and sometimes things just go wrong.
For businesses that are in distress or crisis, there are usually ways to fix things – and it almost always requires a new, fresh set of eyes. Someone with objectivity. It is not going to be the same management team and the same set of advisors who got into the problem in the first place.
I’ve owned a number of companies, and when I launched my first company, Online Access, there was this feeling of being alone even while surrounded with staff. I trusted my team, but they weren’t the ones who had to make payroll. They didn’t have to find investors when cash got tight. I wished I had someone who had strong operational experience who could feel it in their bones – what it was to succeed and make a profit as an owner. Today in running InterimExecs, where we match companies with CEO, CFO, COO, CMO, and CIO leadership, we see more and more family owned portfolios and businesses that need great resources if they are going to continue to thrive. The stakes are high for a family business and there are assets which are dear and need to be protected and grown. Sometimes a business health checkup is needed which in disruptive markets, can lead to bold action – not just caretaking.
Company owners don’t have to go it alone. Not any more. Ensuring a leader who knows what makes a family business successful and how to deal with family business problems is key. Interim executives can be a huge resource in family-owned businesses where mentorship is needed to protect the legacy and help train family members engaged in the business and the next generation to become great managers and executives themselves. That’s a sacred kind of trust.