[Family Business Unfiltered]

I've had the privilege (and on many occasions “the challenge”) of witnessing firsthand the intricacies of family businesses, both as an external consultant and as an internal employee.

Yes, a small % of family businesses are well-structured, corporate-like, neatly-operated organizations. But the majority are a bit more complicated than that.

Studies show that only about 30% of family-owned businesses survive into the second generation, and 12% are still viable into the third generation. Only about 3% of all family businesses operate into the fourth generation or beyond. (Source) .

From the Internal stakeholders’ perspective: (2nd & 3rd generations, employees, Owner/manager):

Family businesses can take on various forms, depending on the familial relationships involved and the structure of the business. Here are some common types:

If you'd asked me to profile someone from the second or third generation of a family business, I might have hastily labeled them as 'entitled' or something similar, and it would have shaped the whole way I interact with them in a business setting! Now that I have a better understanding, I realize that such assumptions are often inaccurate and lack empathy!

In the dynamics of the “Active father” with the “sons/daughters” case for instance:

?The overall family dynamic, including relationships between siblings and parents, can influence how each son is treated and perceived at home and in the business.

From most cases that I’ve seen, the father doesn’t grant authority to his son(s), and keeps on the training wheels on the hope that one day, they’ll be ready. And in their father's eyes, they are never quite ready. This often leads to the son(s) becoming codependent and lacking confidence in their decisions.

The personalities of individual family members can also play a significant role in power struggles. Narcissistic, controlling, or impulsive individuals may be more likely to engage in manipulative or aggressive behavior to achieve their goals.

In my opinion, to reach a certain level, you'll need to become a specific type of person. If this person isn't cautious, they may unintentionally infect their successors (AKA 2nd and 3rd generation). However, this article is not about malignant managers or toxic environments. If you want to read more about that, you can check out this article I wrote 5 years ago. The rules still apply. https://www.dhirubhai.net/pulse/what-expect-when-your-boss-narcissist-yasmeen-tarek/?trackingId=LLvDbuFnTKmH9f4vs05ciQ%3D%3D

Some Characteristics of Family Biz

A family business, particularly one led by a father and his sons, often has a unique internal structure. While it can vary widely depending on factors like size, industry, and family dynamics, here are some common characteristics:

? Centralized Authority: Patriarchal leadership + Strong control

? Family-First Culture: Loyalty and trust + Shared values

? Blend of Personal and Professional: Blurred lines + Emotional investment

? Strong commitment to business success

? Sibling Rivalry

There's a lot to learn from first-generation family business operators. Their old-school approach laid the foundation for how business is conducted, and despite technological advancements, many of their principles still apply. Networking, socializing, business dinners, and relationships are still crucial aspects of business.

Second and third generations often have a more relaxed attitude. The "survival mode" of the first generation isn't as prevalent, as they have the safety net and resources to build upon. They don't have to start from scratch.

On another note, first generations can benefit from the newer generations. It can be difficult for them to let go or delegate, as they're used to doing everything themselves. To them, relinquishing control might lead to mistakes, and it's not the time for "teaching" when their legacy is at stake.

The generational gap between the father and son means they may have vastly different perspectives on business, leadership, and technology. This can lead to misunderstandings and conflicts, as the father may struggle to adapt to the son's modern approach.

If the son or daughter chooses to stay in and continue their father's legacy, they'll need to:

1. MASTER the fundamentals of your industry and business. Gain a thorough understanding of the business operations, including its products, services, customers, and competitors.
2. Actively participate in the business's day-to-day operations. This will provide hands-on experience and a deep understanding of the company's processes, challenges, and opportunities.
3. Spend time with your father, observing his leadership style, decision-making processes, and relationships with employees and customers.
4. Your father may be your mentor, but he's not the only source of information. Beware of codependency. Get your own outside counsel. That way, you'll always have a fresh perspective on what to do next.
5. Understand the business's finances in and out. If necessary, hire a financial guy to help you comprehend the details.
6. Ask why things have been done the way they have been done. Don't take anything for granted!
7. Ask for a formal handover or at least personal introductions to all current and former clients, vendors, and partners! Family businesses are built on strong human relationships. The father is often the face of those relationships, and without him, many clients (and vendors) might choose to work with someone else. I've noticed that older generations appreciate respect, loyalty, and integrity.
8. You likely studied abroad and worked in various international companies before returning to the family business. The goal was for you to bring a fresh perspective to sustain the legacy. While this was the father’s intention, the company has been operating the same way for years. It might be challenging to implement significant changes immediately. Remember, you may not have full authority. Family businesses often have a long-standing staff, and firing unfit employees can be difficult due to traditional family values and loyalty.
9. Remember, you have your own values, review them carefully, and understand the current family biz values, take what’s aligned with yours and discard what isn’t. This is the only way you’ll run your own shop, and your decisions will be your decisions regardless of anyone’s expectations! (you know what I mean)
10. Incorporate modern technologies to improve efficiency, streamline operations, and enhance customer experience. Ofc, do a gap analysis before that.
11. Decide once and for all that your company will be built on the same type of strong relationships with customers by providing exceptional service and meeting their needs. You’ll need to keep the old clients, and get new ones who’re aligned with your own values and the new company values!
12. In general, especially in a centralized-authority family biz, the father is the sole decision maker, not much communication within the family. Maybe change that if you aspire a different type of family and company culture! Create Open and honest communication with family members. Discuss your aspirations and concerns to ensure alignment and avoid misunderstandings, and make sure everyone is on board and address conflicts before they escalate. The company's culture is shaped by the family's values and priorities. A culture of fear, intimidation, and secrecy can foster a toxic environment where employees are afraid to speak out or challenge the leadership.
13. Succession plan: Initiate open discussions with your father about the succession plan. This should include a clear timeline, roles and responsibilities, and potential challenges. Remember the generational gap but also be assertive and take control. Developing a clear and transparent succession plan can help to reduce uncertainty and prevent family members from competing for leadership positions.
14. Get your own support from friends and/or a therapist: manage the stress and pressures associated with taking over a family business.

Ah, and:

My favorite shows?????that feature family business dynamics:

• Succession (USA)
• Yellowstone (USA)
• Billionaire island (Norway)
• Empire (USA)
• Wecarshed (USA)
• The Bear (USA): a bit chaotic, but it has solid business operations principles.

If this resonates with you, let's talk!