Business is Business. When family members (FMs) come into a business, they need to be able to add value to it—and the business needs to add value to their lives. If that’s not the case, don’t risk jeopardizing your family’s economic security as well as ruining family relationships to get into a family-owned business (FOB).
Imagine taking this risk, and then failing to grow it into a profitable, mature, and sustainable organization. When you fail in a family-owned business, you take the family’s security with you.
Public companies are even more likely to fail than FOBs are, yet it’s sad that after all the commitment and angst founders put into FOBs, only 12 percent of them (according to research at the Family Business Institute) make it to a third generation. A primary reason for this is often the poor selection and placement of FMs within FOBs.
If an FOB doesn’t have a process in place…this is what can happen.
Bringing his son, Billy, into his financial services firm seemed so wise to Drew. Billy was smart and had an MBA. Now that he was married, Billy was ready to settle down into a stable career that would give him financial security. It would be great for Drew to be able to eventually hand the business to his son. It would ensure that his clients had continuity when he retires. It would be especially wonderful, they both thought, because they had always gotten along so well together, sharing hobbies and family travel.
It had seemed like a no-brainer, but it turned into a nightmare. It was predictable that Billy would not be a good fit for the role Drew wanted him to fill. Bringing Billy into the business ended up harming it and their relationship. A simple Reality Check that covers all the mental factors discussed in the pages that follow could have prevented this from happening.
Excerpted from Business is Business: Reality Checks for Family-Owned Companies. Published by Greenleaf Book Group Press. Available for pre-order now.