Many people think owning your own dairy farm and working with family members is easy and brings with it a lot of money — if only that were true! It takes a special person who is willing to get up early, commit to milking cows at least twice each day, and doing this each day of the year.
However, family businesses have been, presently are, and will continue to be successful and very rewarding.
Family, business overlap
The family business environment typically has the following key characteristics: the family and the business overlap.
Family considerations affect many business decisions; for example, business expansion is justified by a son’s interest in the business. On the other hand, business considerations affect many family decisions; for example, bathroom and kitchen remodeling must wait until an additional truck is paid for.
The small business way of life brings great satisfaction to family members. Children grow up wanting to raise their children the way their parents raised them. Family pride, values, history, and willingness to sacrifice drive the business to success.
The family business is much more than a business. It is often a family’s identity in the community. Family members are willing to sacrifice much for the success of the business.
Skills vs. staffing needs
On the down side, the opportunities provided by a small business may not fit the strengths of family members.
The strengths of younger siblings in the management of crops, machinery, or sales often duplicate the strengths already in the business. An answer to the desperate need for strengths in financial management, marketing, or labor management may be nowhere to be found among family members in the business.
And the family business often limits the opportunities for career growth. A capable young family member often joins a family business while his or her parents are in the middle of their careers. Grandparents may still play a dominant role.
In this situation, reality is waiting 30 years for one’s first significant taste of top management decision making.
Outside your control
Chronic health problems, weather, marital problems, economic difficulties, and calamities impede progress of the business. Factors over which the family has little control continuously affect the outcomes of plans and expectations.
Family members often come into the business with vague job descriptions, compensation packages, and placement in the business hierarchy.
Confidence that everything will work out substitutes for careful discussion of the pros and cons for joining the business.
It’s a challenge
Several of these family characteristics appear negative. In fact, many family businesses are unsuccessful in bringing in succeeding generations. The challenge is to take advantage of the significant strengths of family businesses while dealing with their inherent weaknesses.
Many family businesses succeed and thrive generation after generation. Top managers and the rest of the family working hard at family relations explain the success.
Guidelines for the top manager
The top manager(s) in a family business has quite different responsibilities than other family members who are in the business. Success or failure in integrating family members into the business rests firmly with the top manager.
The top manager may not be the head of the family. For example, the extended family can have a strong matriarchal head who masterminds parenting, the household, family gatherings, and day-to-day family nurturing. The matriarch can greatly influence the integration of some family members into the family business although she has only a minor role in business management.
The following guidelines, written to top managers, provide, tips, ideas, and strategies for successfully handling family business responsibilities. Successful top managers have successful businesses. Failing top managers have failing businesses.
- Develop a mission statement and goals for the business. The informal nature of most family businesses requires that the planning combine formal and informal discussion. The process of planning helps more than the resulting plan. Engaging all the family members in the process assures that they know and understand the goals and why they are important to the business’ future.
- Provide a testing period for family members coming into the business. The testing period provides a safety valve in cases where the new person doesn’t work out. The parties to a relationship that is not working can break off an employer/employee relationship much easier than a partnership or co-investor relationship. Starting as an employee provides the family member time to determine whether the family business and working for another family member meet his or her expectations.
- Provide written job descriptions for each member of the family. Start by making sure that everyone understands your own job description. Too often, family members join the business with only a vague understanding of what their responsibilities will be. Compensation promises may be even more vague than job responsibilities. Job descriptions pave the way for fair compensation.
- Train people to do their jobs. Employees succeed only if they know how to do what they are hired to do. The same goes for family members. New people in the business usually need some training. Even a family member who was “in and around” the business for years during childhood is likely to need some training.
- Delegate responsibility and authority. This guideline combines job descriptions and training. Make responsibility part of the job description, provide the necessary training, and then delegate. Responsibility builds commitment and enthusiasm. Delegation involves pushing responsibility as far down in the organization as practical. Delegation of responsibility frees you from attention to day-to-day problems so that you can work on new problems.
- Operate a profitable business. An unprofitable business must be turned around if you are to avoid longer-run disaster. Of course, profit does not guarantee family business continuity. It does, however, make it possible to concentrate attention on the family and people issues that can destroy a business just as surely as lack of profit destroys it.
- Develop harmony between the business and family. Family businesses bring stress to everyone involved. The work is never-ending. Family members carry the stress home to their families. On the other hand, stress from home is carried to the business. Marital problems, personal financial problems, and illness, for example, easily affect on-the-job performance. No top manager can control the events causing stress. However, you can be sensitive to the status of family/business interaction.
- Keep family commitments in mind when scheduling workdays. Be mindful of who worked the last holiday.
- Provide leadership and coaching to the business. Every organization needs leadership to thrive. Family members want you to lead. Family members also want to be coached by a caring person sincerely interested in being helpful. Your failure to lead leaves them waiting for someone to step forward. Sometimes, leadership depends primarily on your delegating specific responsibilities to each member of your family management team In some cases, the events call for you to be decisive and firm.
- Communicate clearly and often. Few family members complain about understanding the business too well. Even fewer complain about a manager who encourages them to ask questions as they occur. Open and clear communication creates an environment in which people can disagree with each other without being disagreeable. The top manager can select from a host of communication aids: staff meetings, weekly management meetings, daily “catch up” conversations, annual family business meetings, quarterly written reports to all personnel, suggestion boxes, managing by “walking about,” performance evaluations, speaking to each key person at least once each day, two-way radios, message boards, or a weekly meal out with family staff. Each top manager needs to commit to clear and open communication and then set about finding ways to do it.
- Develop pride throughout the family in your business. Being part of a winning team helps build self-confidence, team spirit, and the conviction that “I am at the right place.” Success builds pride. Progressive, recognized, adapting, and modern farms build pride. Attractive buildings, hats and shirts with the business name and employees’ names, and a steady flow of visitors also build pride. Pride comes from years of attention to important details.
- Nurture each family member in the business. Nurturing is a combination of parenting, caring for, listening to, being concerned about, and being interested in every member of the family. The emotions and feelings that come with nurturing matter most. No one will hand you a recipe for their nurturing.
- Celebrate the business’ successes. Celebrations show that you notice and appreciate the efforts people are making for the good of the business. Reaching a production goal, making it through a rough winter, finishing a harvest season, or completing a move into new facilities deserve to be celebrated.
- Catch people doing things right and say thank you. Discipline usually focuses on people’s mistakes. No one is perfect. Discipline comes with supervising people. Making most feedback positive paves the way for discipline having the desired positive results. Knowing that one is appreciated for the good done helps accept the consequences of mistakes.
- Prepare people for their future responsibilities. To some extent, each of the previous guidelines contributes to this preparation. The future generation of top managers can learn much from observing this generation’s managers. Simply observing is not enough. People need to be given the opportunity to make decisions and then accept responsibility.
- Getting to know successful managers of other family businesses is helpful. Attending regional and national meetings also helps.
- Have fun. The wisest people in a business emphasize the importance of liking the industry, the place, the people, and the day-to-day life in the business. You face a serious challenge when people in your business stop looking forward to going to work the next day. An anonymous source said it well, “When people stop having fun, none of the rest matters.”
(This information was adapted from materials developed by Dr. Bernie Erven, Professor Emeritus, Ohio State University)