Was I the odd man out?

Every business organization has a unique set of challenges and problems. The small family business is no different. Many of these problems exist in corporate business environments, but can be exaggerated in a family business. Family businesses go through various stages of growth and development over time. Many of these challenges will be found once the second and subsequent generations enter the business.

A famous saying about family owned business in Mexico is “Father, founder of the company, son rich, and grandson poor.” The founder works and builds a business, the son takes it over and is poorly prepared to manage and make it grow but enjoys the wealth, and the grandson inherits a dead business and empty bank account.

Here is why I hate the challenges of a tiny family business.......

Emotions. Family problems will affect the business. Divorce, separations, health or financial problems also create difficult political situations for the family members (money will be siphoned from the profits...any excuse will do). Informality. Absence of clear policies and business norms for family versus non-family members (they are NEVER the same for family members...they just want you to think so). Tunnel vision. Lack of outside opinions and diversity on how to operate the business cause a stale environment. Lack of written strategy. No documented plan or long-term planning (outside of selling the business to family members). Compensation problems for family members. Dividends, salaries, benefits and compensation for non-participating family members are not clearly defined and justified (like paying a 'part-time' family member a HUGE salary for a few days of work).

Role confusion. Roles and responsibilities must be clearly defined (family members get special treatment....be honest...you know they do). Lack of talent. Hiring family members who are not qualified or lack the skills and abilities for the organization and the inability to fire them when it is clear they are not working out. High turnover of non-family members. When employees feel that the family “mafia” will always advance over outsiders and when employees realize that management is incompetent and "paralyzed" to change it....Succession Planning. Most family organizations do not have a plan for handing the power to the next generation, leading to great political conflicts and divisions (and what about the non-family members who got you there?)

Retirement and estate planning. Long-term planning to cover the necessities and realities of older members when they leave the company (if the company stays in business that long). Training. There should be a specific training program when you integrate family members into the company. This should provide specific information that related to the goals, expectations and obligations of the position (why not? All non-family members do this…). Paternalistic. Control is centralized and influenced by tradition instead of good management practices (oh my...don't get me started). Overly Conservative. Older family members try to preserve the status quo and resist change. Especially resistance to ideas and change proposed by the younger generation.

Communication problems. Provoked by role confusion, emotions (envy, fear, anger), political divisions or other relationship problems. Systematic thinking. Decisions are made day-to-day in response to problems. No long-term planning or strategic planning (knee-jerk reactions….). Exit strategy. No clear plan on how to sell, close or walk away from the business (only tunnel-vision of making sure the family takes over the business). Business valuation. No knowledge of the worth of the business, and the factors that make (or MADE) it valuable or decrease its value (just that "this is my retirement plan....when I sell it to my children)

Growth. Problems due to lack of capital and new investment or resistance to re-investment in the business (because the “family members” need to be taken care of financially…new cars, weddings, college....right now!). Vision. Each family member has a different vision of the business and different goals (this is enough to drive ANY non-family member out-the-door. Control of operations. Difficult to control all members of the family from lack of participation in the day-to-day work and supervision required (but let’s face it….how hard can this possibly be?...if you can serve coffee….you can sell office furniture…right?)...

comments anyone?