Ever considered starting a family business? Or maybe you already run one, or work at one?
Running any sort of business can be tricky, but working with your family can sometimes make it even more so.
Andy O’Brien, an Austin-based entrepreneur and business coach, knows firsthand about the difficulties that can crop up when you start a company with your relatives. His new book, “WTF Was I Thinking: Family Business,” acts as a kind of survival guide for those who are considering doing the same.
O’Brien joined the Texas Standard to offer his best tips.
This interview has been lightly edited for length and clarity:
Texas Standard: What are the advantages of starting a business with a family member?
Andy O’Brien: The top one is trust. You already have trust within the people that you surround yourself with. So whether it’s your mom, your dad, your sister, your brother, your wife, you already have that built-in trust. So you can move faster forward because you don’t have to uncover what are the ulterior motives in the beginning.
Another big one is, nine out of 10 times, everybody wants to go in the same direction. We want success, right? We want family success. We want generational success. So we’re working together to have that.
All right. Let’s talk about the flip side here. What could go wrong?
I grew up in a family business. I’ve worked with hundreds of family businesses. I’m also in a family business today. And the things that go wrong are boundaries.
From my experience, every Thanksgiving, Christmas, Easter, Mother’s Day, Father’s Day, date night, everything turns into a board meeting. Board meetings at family functions are really a bad idea. Everybody takes a side when they only know half the story.
The other thing that goes wrong, along with those boundaries, is problems that occur at work are taken home, and then they’re taken out of context, or problems at home are brought into the workplace.
And we see hundreds of problems that go from there, from divorces to excommunication. And it’s really a slippery slope for those family members, because now with all of those challenges, you know, other employees that you have see that, and then they start taking advantage of it. So now you’ve developed a culture of mistrust and miscommunication.
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Can you walk us through some of the tips that you touch on in your book about how to run a successful family business? What do you do to maintain those boundaries, for example?
I call it the rules of the game – we set those up in the beginning. But one of the big keys is we develop a communication style, channel, flow chart, whatever you want to call it. So, we learn to talk to each other.
So one of the big tips is learning how others communicate. We have to speak to each other on a professional level. So we learn how each person likes to communicate. So that’s one of the tips that we talk about early on in any executive or leadership or business coaching arrangement with a family business, because we need clarity.
One thing you touch on in your book is this line between hiring talented members of your family and nepotism. And of course, pop culture has gotten rife with conversations about “nepo babies” and that sort of thing.
But, you know, then again, there are many family businesses that are handed down across the generations. Shed some light on that issue, if you could.
Oh, absolutely. It’s very common. The babies of the family, they’re just handed it. They haven’t earned it. Now, I’m not going to sit here and tell you that owners can’t do what they want when they want with their money.
However, I can tell you from a logical standpoint, having somebody come up in the business when you bring a family member into the business and you want to make Bobby the sales manager, when Bobby’s work history is being a dog walker, everybody sees that, and everybody draws a conclusion based on they don’t deserve it. It it kills morale.
So what would you say then, considering what you just said about that frustration that many may feel with the relationship of other family members in the business”
They have to get it out in the open. There has to be some lever within an organization where somebody, let’s say it’s an employee, can go to H.R. and can voice their concern without retaliation.
And a lot of times, the best thing that solves that problem is your son, daughter, husband, wife does not answer to you. They answer to somebody else within the organization so they can learn what no means. They can learn what the business is built upon, and they can start learning from others around them.
If someone who’s considering launching a family business came to you, what would you first urge them to consider before taking that initial step?
First thing is: What is your operational agreement going to look like? Not everybody can be in charge every day, so there has to be a pecking order. Somebody has to be in charge. 50/50 businesses, 50/50 family members, it’s all fun and games in the beginning until somebody disagrees, and then it’s an emotional mess.
If they’re both 50/50 partners and then they have to hire employees, there’s always a wedge, because who do they answer to? Do they answer to Bob or do they answer to Bill? And that’s a problem. We must solve that right up front.
Any circumstances where you might tell someone considering starting a family business, hey, look, I don’t think this is a good idea?
I’ve had that conversation with many people. People have to be willing to hear the truth.
Now, that being said, none of us human beings like to be told what to do. So when you tell somebody it’s a bad idea, just like telling your teenager not to do something, they usually just turn around and go and do it anyway.
So we’ve got to ask them the questions of what do you value in the relationship you have today? What things need to change in order to protect both of you from what could happen down the road?