Family Business Expert Quentin J. Fleming Statistics show that only 30 percent of family businesses survive to the second generation. Quentin J. Fleming tells you how your family business can join the survivors.
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Think about all the quarrels you've had at the dinner table. Now bring all your squabbles and rivalries to work every day. Building a successful company alongside your relatives can be your greatest source of pride and satisfaction or a complete disaster-ever tried firing your kid or dealing with sibling rivalry in your management team?
In Keep The Family Baggage Out Of The Family Business: Avoiding the Seven Deadly Sins that Destroy Family Business, management consultant Quentin J. Flemingprovides practical advice for family businesses while avoiding the sentimentality that can be a death knell for your family's company.
Entrepreneur.com: Do you see the same problems occurring again and again in family businesses?
Kenn Viselman: Absolutely. [One] major problem is that the attributes of a happy healthy family are usually fundamentally opposed to the characteristics of a profitable and effective business. When a family works together, they take the family system and lay it on top of their business and it creates all kinds of problems.
What's killing these family businesses is what I call the golden rule of family baggage. You know all that stuff that happens in any normal family, just the natural part of being a family? Well, guess what happens when you work together or have a family business? It all comes into the business but masquerades as a business situation. And that's what's killing them off. One of the things that drove me to write the book was that in more than a decade of consulting, I had never seen a family business go out of business because of a business reason. It's [always] something else.
Entrepreneur.com: In your book, you offer a questionnaire to help people determine if they have a FAMILY business or a family BUSINESS? Why is this distinction important?
Kenn Viselman: Are you a family or are you a business? That's the critical distinction. [Using] that questionnaire is like going to the doctor for a checkup. If you fill it out and get the proper score, you're probably doing okay. But where it dings you is when you're acting like a family rather than a business. One thing that might help is that questionnaire, which I put up on my Web site. It's a free tool. I don't ask anyone to register. It's something the family can use, employees can use, business advisors, anyone trying to get a quick feel for the health of the business can go on and it will give them their automatic score and feedback.
Entrepreneur.com: What are the advantages and disadvantages of hiring family members?
Kenn Viselman: Family members often have a really strong commitment to the family business. They really want it to succeed. It's not like these employees who say, "Oh, it's 5 o'clock and I'm leaving." They're committed, and they'll be there all night if need be.
Another real advantage is they put a strong emphasis on relationships. Usually the family feels the business is an extension of their family, and that means they want to stand behind what the business does. If you go to an impersonal company, they'll say, "Sorry, that's business. You should have checked it out better." But a family will often say it's our reputation and we want to make it work. So there's often a lot of good will.
One disadvantage is what I phrase as, 'Competency isn't included in the manufacturer's warranty.' Just because someone is your flesh and blood doesn't mean they have the right skills for the business. They may be really talented in another business or industry, but not necessarily in your specific family's business. So sometimes you'll get a mismatch of skills, and it's really not fair for that person or on the business.
Another problem is the classic situation of what happens if someone isn't performing. It's a lot harder to fire a family member than it is to fire an outsider because no matter how much they deserve it, it often creates a major family crisis. And you get some interesting dinners come Thanksgiving time when the family gets together.
Entrepreneur.com: What's the difference between evolutionary vs. revolutionary succession?
Kenn Viselman: The most important thing to remember is no one will live forever, so succession happens whether you like it or not. But the most important thing is to face that fact and take steps ahead of time to make succession a success. If you wait long enough, succession will be forced on you and then it will be a crisis and you won't want the options you're stuck with. But if you start working on succession years in advance, it's literally a nonevent. Everyone knows what's going to happen, people have learned the right skills, everything's been taken care of. So that's why I say it needs to be an evolutionary process.
Entrepreneur.com: What are the mistakes people make with nonfamily employees?
Kenn Viselman: One of the dangers with nonfamily members is the owners and family will often select outsiders based on loyalty to the family. In many cases, you [shouldn't] care if they're loyal to the family or not-you need someone who's loyal to the business. Often when family businesses employ nonfamily members, they tend to hire them in mass or they'll have people who've just been around for ages. They all bear a strange resemblance to dad, so when dad retires, they all retire in mass and you end up losing the whole management team of the company. What you really need is a diverse group of employees and managers: people of different ages, different backgrounds and different perspectives.
Entrepreneur.com: How can a council of advisors help the members of a family business?
Kenn Viselman: All the other books will say you want a board of directors and I really disagree. What you really need is expertise and a group of people who will help force the family to implement best business practices but also have lots of expertise the family might not have. For example, you want a good business consultant who can help steer the council. It's much like your primary care physician. He or she will recognize business problems or structural problems when they're occurring and, if need be, help find the right expertise to solve those problems. You also need an accountant to keep the business focused on numbers and to make sure they're not doing funny things with the money. You also need a good attorney.
If you get that trio, it's not like hiring a senior employee. These are professionals who are consulting dozens and dozens and dozens of clients. So you're really getting a group of people with the expertise of hundreds of case studies they can apply right to the family's business.
Entrepreneur.com: You say a child shouldn't generally work in the family business until age 30. Why?
Kenn Viselman: My book challenges one of the sacred principles of everybody else's books. Everyone thinks that the greatest thing in the world that a family can do is bring their children into the family business and give their children the family business. I vehemently disagree. I think most people were meant to work elsewhere. So one advantage of forcing the kids to work elsewhere until age 30 is they get away from the family for awhile and get a chance to say, "Hey, is this really what I want to do?" Let them get out and find out exactly what they want to do.
Another great advantage is if they work elsewhere, they'll be exposed to different ideas, processes and methods. They can bring that back to the company so you get this pollination of new ideas and approaches. And there are times, too, where they need to get away from the family to prove they can succeed. Let them get a promotion or two or three on their own. Or conversely, let them go work for a mediocre boss and get yelled at just like the rest of us. If they do go into the family business, they realize, "Hey, this is pretty good."