Family businesses are great. You get to do what you love surrounded by the people you love. This can create a beautiful sense of community and closeness, which is often difficult to achieve in a traditional corporate environment. Family businesses also offer a unique opportunity to pass down generations of knowledge and expertise to future family members.

However, family businesses also come with their own set of challenges. Working alongside loved ones can often blur the lines between professional and personal relationships. Miscommunications and disagreements can arise, which can cause tension within the business and family dynamics. Assigning roles and responsibilities without fairness and accountability is always hard but becomes even more challenging when family rivalries and emotions enter into the decisions.

Despite these challenges, family businesses can provide a strong and rewarding sense of community for both the business and the family. With proper communication, planning and problem-solving skills, family businesses can thrive while building a legacy for future generations to come. This article provides an overview of some of the most common issues we see in our work with family businesses.

Poor Planning and Lack of Clearly Defined Goals

Many of the family businesses we work with fail to take planning, goal setting, OKR tracking and strategic meetings seriously. Lack of planning can be a downfall to any business, but family businesses usually have a unique reason to avoid planning. People in a family business assume that everyone in the family knows what needs to be down without formal planning and documentation. Families use shortcuts with each other in their communications and believe that everyone is on the same page without having to lay out specific plans.

Unfortunately, this leads to a lot of confusion and a lack of clear direction. Without five-year and annual plans and fitting OKRs, family members can often disagree with each other on responsibilities and results. Those kinds of disagreements are bad enough in a regular business, but in a family business it leads to personal conflicts and tensions.

Without a clear plan, family businesses are also bad at communicating expectations between family members. Just because two leaders in a company are related it doesn’t mean that they automatically agree on perspectives, purposes and values. Poorly communicated expectations lead to a lack of consensus and an alignment. Without a clearly stated mission, family businesses can make decisions that conflict with each other, waste resources and miss out on new opportunities.

The key is to not take anything for granted. When we teach our clients our specific methods for planning and goal setting that are fun, repeatable and realistic, many family businesses find that their work life and home life improve dramatically.

Lack Of Professional Experience

Probably the biggest reason that family businesses participate in our Enterprise Velocity program is that many leaders in a family business lack experience in other businesses. They don’t have the range of experiences that comes from working in multiple companies that can help them develop new strategies or create repeatable operational systems.

There are of course some strengths that come with family business expertise, such as a deep knowledge of what has worked in the past. But when new problems or opportunities arise, family businesses sometimes need an experienced voice at the table with outside perspectives.

In Enterprise Velocity, we teach leadership teams how to develop repeatable systems of growth and operations that are proven through their use in the many successful companies we work with. And we provide you with guidance through difficult issues, so you have an objective opinion when family members disagree on paths forward. By investing in the development of their family members’ business skills, family businesses can improve their chances of success and achieve long-term sustainability.

Not Involving Family Members in Decision-Making or Business Strategy

When it comes to family businesses, it can be tempting to give preferential treatment to certain family members. Unfortunately, this can result in some family members being excluded from important decision-making processes. This can lead to conflicts, a breakdown in communication, and may even put the success of the business at risk.

There can be many reasons why family businesses ignore some of their family members in decision-making. Here are a few possible explanations:

• Lack of Qualification: Many family members may not have the necessary qualifications or expertise to be involved in the decision-making process. As a business owner, you need to ensure that the people making decisions are competent and capable of doing so to achieve success.
• Personal Conflict: Family dynamics can be complicated, and this can spill over into the business realm. If two family members have a personal conflict, it may be difficult to work together effectively, which can lead to a breakdown in decision-making and communication.
• Favoritism: Family members who are not involved in decision-making may feel that there is favoritism or nepotism at play. They may feel as though they are being excluded because they are not the “chosen heirs” who have been given decision-making power.
• Lack of Trust: Trust is critical in any business, and this is especially true when it comes to family businesses. If family members don’t trust each other, it can be difficult to make decisions together and move the business forward.
• Power Struggles: Family businesses may also struggle with power dynamics, where certain family members try to exert more control than others. This can lead to conflicts and disagreements, which can impact decision-making.

This may surprise you, but we don’t believe that every family member should be treated equally when it comes to decision making; however, they should all be treated fairly for the good of your family relationships. Not all family members have the same level of commitment to the business. Some still lack skills and expertise, so while their opinions may be valuable, they often come with blind spots. If a family member is still new to the business, it doesn’t make sense to give them an equal say.

So how do you treat everyone fairly and respect their input while still deciding on the right direction for your company? The key is to establish clear, documented processes, metrics of success, and decision-making systems.

Documented processes help your business run more smoothly, help you diagnose issues more quickly and help you onboard new employees. But they also help promote fair treatment among family members because there is a set of processes, rules and expectations that everyone knows to follow. This helps to minimize conflict and disputes in the family. It also means that everyone has a defined role and set of responsibilities in the company. A young family member may not understand the entire big picture for your markets and customers, but they can dig deep in the specific area you assign to them.

Clearly defined measurements and metrics also promote fair treatment. Your OKRs and KPIs are benchmarks for success that allow family members to work together toward common goals. They are the lighthouse that everyone can point toward, so even during times of disagreement, they provide a standard that looks forward and backward. For example, let’s say the Vital Profit Metric you established in your company is order size. When dealing with a dispute between two members with different strategies, focusing on impact on order size can give you an objective, dispassionate way to choose between the strategies. And when you put a particular strategy in place, you can then measure its impact on order size to decide if it should continue. This helps to take the personal element out of the decision and make it about what is right for the business.

We often work with family businesses on creating systems for decision making. If you have processes for making decisions, you take favoritism out of the equation. In Enterprise Velocity we give you models, matrices and maps to help you make the right decisions while treating everyone fairly.

Poor Communication

We are not psychologists; we are experts on business growth. Yet we have seemed many common reasons why family members communicate with each other poorly.

Emotional Baggage

Family members may have unresolved personal issues, rivalry or past conflicts that affect their ability to communicate effectively in a business setting. These personal issues can build up over time if you don’t address them, leading to a breakdown in communication as family members struggle to separate their personal feelings from their professional obligations. A neutral third-party is critical in bringing an objective perspective to the table so that personal issues don’t get in the way of a productive work environment.

Different Communication Styles

Why won’t Sophia just text me back with a simple yes or no? Why is Liam always calling so early in the morning? Family members may have different ways of expressing themselves or different expectations when it comes to communication, which can lead to misunderstandings and conflict. Communication styles can vary widely between family members due to factors such as personality, upbringing, cultural background, and life experiences. Some individuals may be more direct and assertive in their communication; others may be more passive and diplomatic. Some family members may expect frequent and open communication; others may prefer more privacy and autonomy. These differences lead to misunderstandings and conflict when family members fail to understand or respect each other’s communication styles and preferences.

Power Struggles

Family businesses often involve complex power dynamics, with some family members holding more influence or control than others. This can create tensions and make it difficult for everyone to communicate on equal footing. As we mentioned above, power struggles can arise due to the involvement of multiple family members in the decision-making process. Often, some family members may hold more sway or have greater control over important aspects of the business, such as finances or operations, than others. This dynamic can create imbalances and tensions within the family, making it challenging for all members to communicate and collaborate on an equal footing. These power struggles may also be exacerbated by personal relationships and histories, leading to conflicts that are difficult to resolve.

Lack Of Clarity Around Roles and Responsibilities

When family members aren’t clear about who is responsible for what tasks and decisions, it can lead to confusion and disagreements. Family members may assume that someone else is taking care of a certain task or deciding, when in reality, no one is. Additionally, family members may have different expectations for what each person should be doing, leading to conflicts and resentment. Clarity around roles and responsibilities is crucial for effective communication and teamwork within families. It helps to ensure that everyone is on the same page and working towards common goals.

Overlap Between Personal and Professional Lives

In a family business, it’s difficult to separate personal and professional relationships. This can create tension and make it difficult for family members to communicate in a purely business-focused way. When family members are also business partners, it can be challenging to separate personal relationships from professional ones. Family dynamics, emotional attachments, and biases can make it difficult to communicate effectively and make decisions based on facts, logic, and objective analysis rather than subjective feelings.

We work with family businesses on communication styles, training, and planning to make sure that communication is consistent and clear. Some of these areas might include things like status reports, company updates, weekly tactical meetings, quarterly strategic sessions, common key messages, employee training and even things like email etiquette. Communication planning ensures your communication is consistent, clear, and effective, helping you build stronger relationships and achieve your goals.

Generational Conflict

Generational conflict is very common in family businesses. We’ve seen many examples of this in our work with family businesses.

A common area of conflict involves technology adoption. Different generations have different preferences and habits in technology usage. Younger generations are “digital natives,” who were born into a world surrounded by technology. They are generally more comfortable with new technologies and may even prefer them to traditional methods. They may push for the adoption of new technologies and be quick to embrace them, seeing them as a means of making things faster, easier, and more efficient. Older generations who grew up in a different era may be more cautious about new technologies and less likely to change their ways. They may prefer to stick to traditional methods that they have used for years and be hesitant to try out new technologies that they perceive as more complicated or unnecessary.

Issues with business strategy are similar. Generational differences can be particularly challenging when there are conflicting opinions on which direction the business should take. While the older generation may have a deep-rooted attachment to traditional values and tried-and-true methods, younger generations may be focused on innovation and expanding into new areas. These differing opinions can lead to tension and disagreement, which can ultimately hinder the company’s growth and success. It’s important for businesses to find a way to bridge the gap between these generations and create a strategy that incorporates the strengths and ideas of each generation.

A very common but often overlooked area of generational conflict is work-life balance. Younger generations put more emphasis on maintaining a healthy balance between their professional and personal life. Older generations tend to prioritize work and consider their job an essential part of their identity. The disparity in priorities can create tension in the workplace or at home, especially, as different family members may have varying expectations about how they manage their time.

Succession planning can often be an area of conflict, but many family members are uncomfortable discussing it. No one wants to admit that mom and dad aren’t getting any younger. Succession planning is about formally identifying and developing potential successors for key leadership positions in your business. In many cases, older generations may hold on to these roles for extended periods of time, creating a sense of frustration among younger employees who may feel that they are being blocked from advancement opportunities. This can lead to resentment and a lack of engagement among younger members. You must spend at least a little time each year on effective succession planning strategies that ensure a smooth transition of leadership, foster talent development, and promote employee engagement.

Every Family Business Needs Some Outside Advice

As you’ve read above and probably experienced daily, family businesses often face unique challenges due to the overlap of family dynamics and business operations. Emotional ties and personal relationships can sometimes interfere with sound business decisions, and addressing family conflict can be especially sensitive. Bringing in qualified, objective outside consulting can provide several benefits for family businesses in these situations.

Perhaps the biggest benefit of working with us on Enterprise Velocity is our ability to offer unbiased insights and recommendations about your business. We can be more objective than family members, who may have vested emotional interests in specific business decisions. Additionally, we bring a wealth of knowledge and experience to help you create repeatable, sustainable business processes to ensure long-term business success.

When it comes to family conflict, we also provide a neutral perspective while also offering a safe space for family members to communicate and share their views. We can often help to uncover underlying issues and provide guidance for effective communication and conflict resolution.

If you operate a family businesses and are looking to improve operations, create sustainable business processes, and navigate sensitive family dynamics, please contact today for a free consultation.