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On Business Suits and Family Business

Authored by Mike Sipple Sr., Chairman of the Board at Centennial.

Just like many business men and women, a suit is a regular part of my wardrobe. There is a lot I get accomplished while wearing a suit. However, there is also a lot I know I should not attempt while wearing a suit, such as mowing the yard. It is no secret that you need to exercise caution while wearing a suit if you want it to last. Family businesses are similar in this way; they require special care to ensure long-term success.

Family Businesses Require Extra Care

This extra level of care is something family business owners are very aware of.  However, this sensitivity is not always apparent to business leaders in non-family businesses.  Many dynamics are exactly the same whether it’s family run or not.  You still need to have successful operations, finance, sales, marketing and the same overall structure.  You still have to offer a valued service, sell a product or manufacture something.  Those things are similar, but family businesses have an additional layer– additional challenges– that don’t concern other businesses.  That’s “family dynamics”.

The family dynamic isn’t right or wrong, it is just different, and you need to know how to properly navigate the differences to have a successful family business.  I’ve been working alongside my family for over 40 years and we have experienced a lot of challenges specific to family businesses.  I have also worked with many other leaders of family businesses and have seen their similar and unique challenges.

Two Hard Truths about Family Business

  1. Business decisions affect the family
  2. Family decisions affect the business

In a traditional organization, you can get away from your coworkers and physically remove yourself from the dynamics and stresses of work when you go home.  With a family business, you may live with your coworkers (for instance, my wonderful bride of over 50 years is also a Centennial VP.) Your business and personal life may bleed heavily into each other.

Tough business decisions need to be made no matter what kind of business you’re involved in.  You need to make changes and you need to confront improper behavior.  Those situations are hard enough when it involves someone who is a valued, but non-blood related. When it’s a relative, the repercussions are potentially greater.

Both small and large family decisions will affect the business.  Small decisions may look like, “Should everyone attend the family reunion which will cause 3 of our 15 employees to miss work at the same time?” Larger family decisions such as marriages and divorces create waves of repercussions for a family business.  These challenges often involve hours and sometimes months and years of discussions and compromises.

4 Tips to Manage the Sensitive Layers of Family Business

  1. Be good communicators

Communicating well is recognizing which “hat” is being worn when you are having a discussion with another family member.  When I reply to my son, who is now the CEO of our company, both he and I need to know if I’m replying as dad, owner or CEO.  My answer may differ depending on the hat I am wearing.  Likewise, I also need to know if he’s asking as son, CEO or fellow team member.  The same goes for my VP/wife. This one can be even more sensitive, as you can imagine.

2. Set clear guidelines

Outline what is acceptable behavior for all employees, including family members.  Family members should not assume they are above reproach.  We have seen very destructive situations because family members are treated differently than non-family team members.  Too often, poor performance or unethical behavior is overlooked because it’s family.  And on the flip side, we’ve seen rewards given to undeserving family members just because they are blood-related.

One of the greatest disasters occurs when the business is passed to the next generation despite the fact that the next generation is not a competent leader and not ready to lead the company.  Your successor needs to possess more than your bloodline to make the business succeed.  Clear guidelines need to be established to ensure there is proper behavior and leadership from ALL team members.

3. Handle conflict in a healthy way

You cannot ignore confrontations and conflict if you want your family and business to be healthy.  As difficult as it may seem to work through a problem, unresolved conflict is worse.  Address issues in a timely manner or they will grow into major conflicts.

4. Identify which decisions you want to put family first and which ones put business first

There are some decisions you make that will be a family-first decision.  It may be the decision to take a week-long family vacation with the extended family.  This may not be in the best interest of the business. However, you can wisely decide that it’s worth it and the business can sustain itself for that amount of time, especially when you have other great leaders in place. And, in this age of technology, you can be readily accessible if and when needed.

Other decisions will be business-first.  You may need to make budget cuts and one of the roles that needs to be cut is a family member’s role.  You may find some viable options for that family member but there’s a good chance feathers will be ruffled.  This is a time when the business’s needs may trump the family’s ideal situation.

Recognize that some decisions will favor the business and some will favor the family.  Knowing this and seeing it for what it is will help you when you have to make tough calls.

Handle with Care and Enjoy

So much of enjoying a profitable family business is realizing there’s an extra layer to be aware of. Just like your business suit, if you are aware of its special needs, it can have long-lasting success.  Working hard to see your family and business succeed is a great joy…. simply handle both with great care.

I have been richly blessed to have the opportunity to work all these years with my wife and son, along with other great key team members who have been a vital part of our extended family. Bloodline or not, it is an honor and pleasure to lead and serve alongside our whole team in our family business.