3 Common Family Business Problems and How You Can Solve Them

By August 17, 2017 December 14th, 2019 Common Business Problems

Last Updated on December 14, 2019 by Dave Schoenbeck

You don’t have to watch reality TV to know that running a family business and working with those closest to you can be both a blessing and a curse. While being so close to your loved ones can be enormously rewarding, it can also lead to stress within the group and sometimes, irreparable damage.Common Family Business Problems-min

If you’re running a family business, chances are you’ve run into snags a time or two with your staff members – namely, your family members. Knowing how best to navigate those waters can be tricky and ensuring that everyone comes out on the other side without hurt feelings takes a special touch.

Below, I’ve outlined 3 common family business problems and how best to handle them.

Top Family Business Problems #1: Communication from the leader is often unclear.

All successful businesses require a strong and competent leader. WIthout a good leader, they’re bound to fail – regardless of whether the family is involved or not.

One of the most common family business problems is a lack of clear planning, and it can be toxic to the growth and prosperity of the business. Regardless of who the leader is, it’s important for that person to communicate often and clearly with the family members involved in helping make decisions as well as those who are “on the ground” about enacting the changes that are decided upon.

How to Solve It:

According to Dr. John A. Davis, a leading family wealth and business expert and respected Harvard University lecturer, it’s vital for a family business to be well governed:

“Governance provides a broad sense of purpose or mission for the group and gives the group a sense of stability. Without stability, we cannot plan long-term. Family business systems have an enduring advantage over all other kinds of enterprise in large part because of their long-term goals, plans, and commitments. Without stability, you lose your built-in advantage. Without adequate governance, you don’t have adequate stability. The family business system absolutely must be governed, and governed well, for success.” –Dr. John A. Davis

The business may not be a municipality, but it should be run like one. Proper business governance ensures that problems are identified and solved, plans are made for the future, and that unity prevails. With governance, trust grows and discipline is inherent. It means that everyone has a voice and an opportunity to take part in different aspects of the business.

Top Family Business Problems #2: Responsibilities and roles between family members are unclear.

Everyone likes to know what’s expected of them. This is true in any relationship – we hear it in marriage vows between two partners committing to sharing their lives together; we see it in strong business relationships; we practice it in our friendships.

So why is it that in family businesses, sometimes roles and responsibilities aren’t clearly outlined or assigned? According to family business coach Pete Walsh, “Many family businesses avoid clearly outlining roles and responsibilities because they somehow feel greater clarity and responsibilities might lead to greater accountability which could lead to difficult conversations about performance.”

How to Solve It:

There’s no question that performance-based conversations can be awkward, but they’re so important to the health of your business. However, failing to make a conscious effort to hold these discussions will quickly lead your family business down the path of ruin.

To combat this common family business problem, meet with your entire staff periodically – no less than twice a year – to talk about business goals and plans. Ask the collective group to participate and share their thoughts and suggestions for improvements.

Be sure to also sit down with each member and talk about their specific roles, responsibilities, and goals within the family business. This is a great way to ensure everyone feels they are valued and that their voice is heard. Ensure that there’s a strong sense of accountability present so that once the lines are drawn, everyone knows how to drive within them.

Top Family Business Problems #3: Family issues seep into business.

This is one of the all-too-common family business problems and unfortunately, it’s so easy for it to happen within a family-run enterprise. Just as “drama” is wont to creep into close-knit business relationships, it seems that family businesses are that much more prone to this kind of trouble.

Whether it’s due to disagreements about the company’s future, making major changes to internal policies or external product and service offerings or difficulty influencing a family member, things can get sticky and fights can break out. Ensuring that everyone stays happy and that things don’t get ugly can be a job all on its own.

How to Solve It:

Family drama can come from several different sources and every instance requires a different kind of finesse. Longtime entrepreneur and business consultant George Isaac suggests, like Dr. Davis, establishing a governing arm and, also, including a board of directors or advisors (one or a few, depending on the size of the business) comprised of non-family members. Often, it’s better to have an objective view from someone (like your favorite business coach) who won’t be swayed by underlying family dynamics.

Isaac also suggests having specific policies and processes in place to deal with family issues both inside and outside of work. Often, home disputes don’t get left at the door and can wedge their way into the workday. It’s important to acknowledge this and make a point to approach each issue with an understanding of this fact.

Running a family business is a great way to bring your loved ones closer and create a lasting legacy. Despite these common problems, it’s possible to include everyone who wants to participate and work toward a common goal.

By ensuring you communicate effectively and are open to discussion, are upfront about roles and responsibilities, and actively manage family challenges both on and off the clock, you’re sure to lead a winning venture that you can pass on to future generations.

See also: 3 Additional Family Business Problems and How You Can Solve Them

If you would like to learn how to better align your family member partners, and resolve your family business problems,  fill out my contact form and let’s schedule a complimentary one-hour coaching session.

Dave Schoenbeck
Follow Dave