Joining the Family Business: Is it Right for You?

If this is an option for you, congratulations! Family-owned or -controlled businesses play a key role in the global economy. “They account for an estimated 80% of companies worldwide and are the largest source of long-term employment in most countries. In the United States, they employ 60% of workers and create 78% of new jobs.”[1]

Whether or not to enter the boardroom with your family could very well be the most important decision of your life. Just like choosing your spouse or your life partner, it is THE decision that can make life grand or encompass you with battles that are too close for comfort. It can be a very rewarding career and provide many opportunities for advancement and a secure future. But, if things go south, if the family members don’t have the same vision, the same values and lack trust in each other, leaving the family business can be as emotionally and financially difficult as leaving a marriage.

What are some of the things you should consider?

  • Is the business a family run business or a business owned by family and run by others?
  • Has the current generation installed effective family and business governance systems to prevent family tension?
  • Does one person have the clear authority to make decisions or will everyone have equal say?
  • What are the plans of the current generation of owners in regards to their retirement and do they align with your expectations for ownership?
  • Are your siblings, cousins and other family members who are involved in the business on the same page as you regarding future benefits and compensation?
  • Are you willing to start at the bottom to increase your chance of success?
  • Do you have the patience to wait on the current generation to retire so your ideal senior leadership position opens up?
  • Are your family communication systems functional or dysfunctional?
  • Have you analyzed the company profit and loss statement and balance sheet so you know what you’re signing on for?
  • Is the business a piggy bank for the family life style or is it run like a business, with a plan and intent on sustaining itself?

While there are numerous cases of family enterprise success stories, cases of harmony, health and longevity seem to be exceptions to the rule. According to the Family Business Institute, only 30% of family businesses last into the second generation; 12% are viable into the third. There are still many businesses that do succeed beyond the next generation and several generations beyond that and yours could be one of those.

If the business is small and there are many owners who do not currently work in the business but derive benefits like income, stock value appreciation or other goodies such as tickets, cars and phones … proceed cautiously. Many larger later-generation family businesses do thrive with inactive owners who receive dividends. Working for family business owners who feel entitled but are not helping create value could end up being frustrating and cause family tension.

If the business does not have a family employment policy that addresses employment, compensation and benefits AND the current owners are lacking a plan, I would advise you to look elsewhere for employment and reconsider the family business five years from now.

If you expect to be in a senior leadership position in five years, your expectations may not be met unless there are health reasons that cause the current generation to retire. It can take 15 to 20 years for a very capable next generation leader to rise to the top. If you are banking on an open position being available when you are ready, you may find yourself waiting decades for elderly owners to officially retire.

How do you increase your chance of success?

  • Start at the bottom! Learning the business from the non-family employees will enable their respect and empower. Employees as well as your other family member business owners will be more willing to follow you some day if you do.
  • Do what you love! Also consider if you would enjoy the people you interact with every day, such as the other employees, customers and vendors. If you are only considering the family business because you need a place to work and know it isn’t really what you love to do … don’t do it.
  • Trust your gut! If you trust the other members of the family and relatives in the business now, things are more likely to go smoothly. If you would think twice about lending them money, your car or tell them your deepest secret, listen to your instincts and don’t go into business with them. If they don’t trust you now, it probably won’t get any better. Pay attention to that red flag. It’s there for a reason.

[1] Leadership Lessons from Great Family Businesses, Harvard Business Review, April 2015

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