The 8 Truths of Family Business

The Pros and Cons of Working with a Family Business

Working with a family business can be a unique and impactful experience, offering both advantages and challenges. Over the years we have had the opportunity to work in companies with all kinds of family connections; parents and children, siblings, husband and wives, cousins… you name it.

While being amid such an arrangement, sometimes the family members see it as a blessing and other times they think they have it harder than those that aren’t working or partnered with their family members.

From an outside perspective, here are some of the advantages and disadvantages we see when it comes to working with family.

First some of the advantages:

1. Easier Decision-Making Processes: Family businesses often have a flatter organizational structure, which can lead to quicker decision-making and implementation of new ideas. Family members are used to making all kinds of decisions together, so they already know individual’s approaches to decision making, what is important and not important to each player and the art of timing. That knowledge and understanding makes the process a lot more expedient.
2. Family Support: Family members may have more opportunities to take on roles within the business, provide financial resources and contribute to the overall company’s success. They are invested in seeing each other succeed, so are often willing to go above and beyond to make that happen. The shared goal of profitability can drive a strong commitment to the business’s success, potentially leading to job security for all employees.
3. Transfer of Knowledge: Growing up or being a part of a family business generally means that the business is often a topic of discussion around the dinner table. While this can be seen as a good or bad thing to the individual, the reality is that these informal discussions allow for improved communication between family members. Communication happens not through a formal meeting, but as passing comments when family intersects business.
4. Relaxed Environment: The business tends to be a little more relaxed and comfortable because of the familial atmosphere. That said, some of the discussions may get a little more heated, but there is a general understanding that family isn’t going anywhere. Family members are somewhat bound to each other because they understand that whatever happens at work, will also need to be dealt with when they get home. Issues tend to get resolved quicker as a result.

Now for some of the challenges

1. Risk of Favoritism: Depending on the role of the family member, sometimes they can be perceived to receive preferential treatment, which can lead to conflicts and a divide among the staff. In some cases, this maybe true and in others it can just be perceived. That desire to see the ones closest to us succeed, can make it difficult to not make excuses for them, when they aren’t.
2. Complex Dynamics: Personal relationships can complicate professional interactions, potentially leading to tension and difficulties in separating work from personal life. While on the one hand, that understanding that “no one is going anywhere” can be great, but it can also mean that “no one is going anywhere” producing a level of stuck.
3. Succession Challenges: Planning for business succession within a family can be complex, with emotional and financial implications. There can be competing interests financially. There can be differing beliefs about the capabilities of those involved to be able to take over the helm. There can be opinions from family members not actively in the business, that need to be handled. It can often take the need to look for someone outside, to bring a different, more logical perspective.
4. Professional Development: Family members can take on roles that they may not be qualified for over the long terms. As the business grows, sometimes it can outgrow the capabilities of the individual and as a result impact the performance of the business. As the same time, non-family employees might perceive a ceiling to their career advancement, which could affect motivation and retention.

In conclusion, working with family in a business requires careful consideration and management to balance the inherent pros and cons. While some will argue for or against family in a business, we believe there is not one better than the other. Leading a business is about leading people, family or not, and your ability to create a shared vision, will be the thing that moves everyone in the end.