Personal family business
Less than a third of family businesses succeed in the second generation. One factor leading to their demise result from conflicting mindsets and emotions either between parents and children or between siblings. In this column, we look at generational conf lict between the parent and the child, and share a few ideas on how to deal with it.
Conflicting mindsets regarding the building of the family business will tear both the family and the business apart. The resulting passive-aggressive or confrontational behaviour creates an environment where e mploye e s a r e left uncomfortable, customers get fed up and suppliers lose confidence. Such a situation is incredibly emotional and anyone who dares approach the family on this is often in for a severe tongue-lashing.
Unpacking the mindsets and then finding a resolution to build the business is a big part of the solution to this problem.
First, the founding parent may see the business as a pension. As the parent gets older, they extract more and more income from the business in order to live as they have no alternative income.
Second, the founding parent may want to keep the business in the family, and there is most likely no succession plan in place.
Lastly, the business was most likely never built into an asset of value, meaning that the value of the business subsists in the individuals rather than in the business itself, making it difficult to pass on the value to the next generation.
The child adopts one of two views. Either the opportunity cost, driven by duty, of joining the business leads to frustrations because the child is prevented by a nervous parent from expressing their potential or the child is arrogant and feels entitled, taking the fact that they will eventually own and run the business for granted. Both take a toll on the business and especially the family unit!
While the solution is obvious, implementation is plagued with the baggage of family history and emotion. It is further encumbered by family relationships, where members are often not conscious of the fact that their behaviour may be causing offence.