America's Best Business Practices

Mike- I’ve turned around several small companies and am currently involved in a family owned & operated business (40+ yrs, well known). I can attest to your 7 steps as being a great starting point.

#1 & #2 are the most important but often missed because they assume business acumen and discipline (too much family and not enough business). Without them it’s nothing more than a lot of heartburn, wasted efforts and missed opportunities.

Mike – You have hit on one of most important topics in business. I have been involved in my career as an employee and consultant in many family owned businesses.

Many of these family owned businesses have brought in unqualified family members in management roles and even to run the business. When unqualified family members are brought into a business the “Core” employees which are the “heart and soul” of the company will strongly resent such a move. Core employees are the ones that grew and built the business which will now be put at a high risk of failure. These Core employees may leave the business and even go to a competitor or remain out of loyalty but only in body, not in heart or spirit; the real commitment to the business forever lost.

I have been told that family will always come 1st when it should be the needs of the business which is where the family ultimately derives its wealth. If word gets out on the street that unqualified family member(s) are moving into key role(s) at one of their competitors; savvy owners will pounce on hiring away as much talent as possible, even contacting customers to “advise” them of such important changes.

In the best run companies owners have told me they always watch for changes in their competitors business where “unqualified family member(s)” enters into the business; savvy businesses will take advantage of the opportunities that present themselves to grow their business. Why do so many business owners believe placing unqualified family member(s) in key role(s) is worth risking the business; just to keep it in the family?

Best of Success,
Eric Mitchellette

Mike,

Great article. You hit on a number of concerns and struggles with owning and operating a family-owned/run business in today’s marketplace. Thanks for sharing.

Mike:

It is always different consulting a family business thanks to the dynamics you mentioned. Succession planning or lack of always an issue. Lack of in the restaurant business has lead to the decline/death of white table cloth restaurants. The new generation do not want to work as hard as their parents or grandparents. Easier to sell the location. Farming is the next industry that is going to get hit big time since the average family farmer is 56 years young right now.

Jim, although I totally agree with your comment, I think there is more to it than just the differences between generations (although that too).

One generation started with little to nothing and the only way they would be able to to cash out is to build something of value. The succession generation starts with something of value and can cash out immediately without having to work for the money.

Therefore the second generation has more options than the first generation and often chooses to take the easy, quick money rather than working the machine for a lifetime of revenue.

What do you think?

Mike – When you have money you definitely have more options, but the next generation has also been exposed to more options – education for one, so that is why they can choose another field of interest. Travel is another. More exciting than sweating over a business 24/7. I could go on, but all your points are valid. I am only commenting based on my experience which is limited to being in the food business for years, make that decades.

An additional resource Family Businesses now have, to network with other families, participate in on-line discussions specifically focused on family business issues, find resources and experts in the field and participate in educational seminars on-line can be found at:

http://www.netfamilybusiness.com

Mike.

Though I am located in different part of the world, not in US but in India. I completely agree with your views about businesses owned by families and how they are run with no discipline and lack professionalism. Because I work as a consultant on Human Resource Training, I have been experiencing this peculiar ways of working with family members where non family members get demoralized and frustrated with some of the unfair practices adopted by family run businesses.

I call them small kingdoms run by one man or woman with other family members who are not from the field, so do not have experience and professional characteristic to take business idea forward.

Of course, many become sick units on account of lack of professional vision and management in place. since I see good businesses going in red just because, human resources available are not treated respectfully for their positive contributions and not rewarded when the time comes, I decided, this is an area where employers and employees both need mentoring to see things in perspective.

With my 30 plus years of experience from the Business management of every functional area, I am presently working to arrange seminars and workshops for lecturing on how good business ideas can be managed with professional vision and promoted successfully taking along every with other contributor in business.

The key to success is getting the best performance out of every individual working from the family or from non family member.

Your sharing an experience from your professional life convinced me, it is same all over, West, or East. Human minds need to see things beyond for making this world a better place to live.

for success in common mission
Ajay

Ajay, thanks for your comments. There is one thing though that I would like to clear up. I did not suggest that ALL family businesses were run this way. I do know some where family members are treated like any other employee in the company.

In my own businesses, I have had to fire my wife
for tardiness and two hour lunches and my son (17 at the time) for screwing around instead of working. It may sound tough but in both cases, I enjoyed greater harmony at the office and at home.

My point is that when family members work in the business it creates problematic situations. This does not make it good or bad. How you deal with the situations is what makes it good or bad.

Mike,
i do agree with your poit-of-view. There are always exceptions. But in India, this is my observation that most, or majority of family owned businesses are in mess because of unruly family membars taking advantage of the positions.

Well, now, it all depends on how the top person deals with the situation. You are absolutely right, it all depends on how one deals with the situation at the helm of it. Unfortunately what you did in case of your own business is what a professional is suppose to do. That is the right management vision to keep everyone in right perspective. You need to do to save your business from getting into mess. What you did is examplery, no doubt. But very few have the will to take action when it comes to immediate family members. And in India, (without being bias ), what I see is, most proprietary businesses are run by giving free hand to immediate family members.

The problem comes only when the top person can not deal with situation with professional competence. Yes, I agree, there are excetional cases in India but I would say they are in minority. Majority business owners, run their busniesses by listening to their wives, other family members who work as their satelites to pass on the information about other staff. and it is always one sided story.

My experience with most even with the large organisations is not very good when it comes to professional management. This is about India I am talking about. I am in touch with many organisations and I get disturbed with the kind of attitude shown by senior mangers and senior managements. And in my blog, officially Speaking I keep writing about the same issues.

I hope things will change.

The Family Team(TM) is formed by targeting the individual problem solving strengths of each member; this process solves critical care and management challenges within the family business, answering the question who does what.
Life Transitions University is founded on the principle that working with families requires a knowledge base of the family business members, their families and their specific challenges and strengths and transforms the family unit into a productive and united Family Care Culture(TM). The family business unit becomes aware of their instinctive approach to challenge; their innate ability to be productive and the structure engages members where they are uniquely equipped to add value and when their strengths are necessary as they form a synergistic and holistic collaboration within their family community.

Hi Mike,

I went into a Real Estate deal with a family member and that didn’t turn out too well. I see from your article that my situation paled in comparison to the pitfalls you outlined.