Full access to Entrepreneur for $5

Family Business Challenges Need Novel Solutions

When you're working closely with family members, solving problems is no longer as easy as saying "Go to your room."

Opinions expressed by Entrepreneur contributors are their own.

Fretful family business owners spend millions of dollars on books, seminars and outside consultants, but it's impossible to find a one-size-fits-all solution when every family is different.

Still, I've met the owner-managers of two prosperous family businesses who created unique strategies that may help you sleep better at night.

One 60-year-old seafood company established strict rules and penalties aimed at keeping family members from criticizing or reprimanding employees who didn't officially report to them. The other business, a Phoenix staffing firm, began transitioning power from one generation to the next when the founder-mother started working at home part-time. But letting go of the day-to-day power and responsibilities isn't easy.

"It feels like a knife in my chest when I go there and see my empty office," admits Kathy Staudohar, founder of Accent Administrative Staffing in Phoenix. She and her daughter, Sara Staudohar-Emmons, founded the company 11 years ago, relying on the experience Kathy gained from working at national staffing firms.

Accent, which posts annual revenues between $3 million and $5 million, places about 800 people a year in jobs. It's been profitable since the day it opened. About five years ago, Staudohar's son, Mark, joined the business after working for a local politician. The three worked well together until a couple of years ago, when Staudohar said she felt her kids began to "gang up" on her. When they weren't united against her, they competed with each other for her attention-something very common in a small family enterprise.

"I felt myself being pulled back and forth," said Kathy, who hired a family therapist to counsel them both individually and together. The few sessions helped, but the problems persisted. Last December, Staudohar said she woke up at 3:30 a.m. and decided to take action.

She offered her children three options: sell the business, fire both of them and hire nonfamily managers, or she would move out and work a few days a week from home.

"On top of everything else, I felt like I had lost all my personal relationships with them because we saw each other at work every day," said Kathy, who keeps in touch via e-mail and has the ability to tap into the company computer network from her home office. So far, her solution has been well-received by her children and their handful of employees.

"This business is my baby, but I'll never go back," said Kathy, who recently turned 60.

Sara said her mother's abrupt departure surprised her, but she thinks things are working out well. She admits she misses seeing her mother every day but feels her support from a distance.

"It's been a great opportunity for Mark and me to step forward and manage the company," said Staudohar-Emmons. She said they didn't realize just how much work their mother did until she limited her day-to-day involvement.

"She likes the flexibility of not coming in, but wants to feel needed and needs a place to hang her hat," said Mark, vice president of sales and marketing. "She doesn't have to worry about the business because she trained us well."

Working part-time from home has freed Kathy to spend more time with her ailing mother and husband, who underwent open-heart surgery recently.

While the Staudohars came up with a novel solution to their problem, the six Cigliano brothers and one sister who own and operate Santa Monica Seafood, a major West Coast wholesaler and retailer of high end seafood, are still grappling with many challenges.

The company, founded in the late 1930s, has three locations and 215 employees. They sell fresh, frozen and smoked seafood to restaurants and retailers in California and Nevada. In recent years, the Cigliano family has hired several management consultants, investment bankers and a family therapist to help sort out various problems. Although they all own stock and work at the company, the eldest brother, Gerald, serves as president and CEO and wields the most power.

"I have voting control and I can overrule them, but I don't," said Gerald, the only sibling to have worked outside the family business before joining it. He spent three years as an attorney before taking over the business founded by his father and an uncle.

One of the biggest problems arises when the family members, in their roles as shareholders, reprimand or criticize employees who don't report to them. Tension created when family members interacted with employees who didn't work for them led the elder Cigliano to institute a strict policy that calls for verbal and written warnings and a week's suspension without pay for violations.

"It's a challenge because we're both employees and owners," said Marisa Neal, the youngest of seven siblings, who handles marketing and training for the company's three retail seafood stores. "The problem is, employees look at you as an owner-not necessarily as an employee."

Neal said trying to maintain warm family relationships outside the office is a big challenge. After their parents died, the children often gathered at each other's homes for Sunday dinners, but in recent years, they rarely socialize. She said everyone is busy with their own families and isn't motivated to spend time together on weekends.

Neal said it's tough working for a family business because "things take so long to change and it's very hard for my siblings to take direction from outsiders."

"We're afraid to take risks because it will affect so many people's lives," she said, adding that sometimes she wishes they didn't have a family business. Still, as the mother of a toddler, she enjoys the freedom of making her own schedule and working for a company she owns.

Gerald admits making any changes is tough for him because he feels responsible for his family and his employees.

"I try to make decisions that are in the best interest of the family," said Gerald, who went outside the family to hire a controller earlier this year. And now he's looking for a vice president of wholesale operations.

Some of his younger brothers work as salespeople, others handle operations, and one brother is responsible for the company's computer systems. He said the three youngest siblings tend to stick together and have a different view of the world since they were born after the family business began to flourish and the family had more money.

"There was a different experience for the three oldest children," said Gerald. "There was more money when the younger kids came along."

Jane Applegate is a syndicated columnist, author of 201 Great Ideas for Your Small Business, and founder of SBTVT, Small Business TV, which provides multimedia resources for business owners.