Should family be added into the business mix?

Sally-JArlette-Joy4-SmallIn life, a person’s family determines a great deal of who we are. Family ties do bind us, however in most cases, these ties might not be best for business. Investing time and money into a business with people you know, or who seemingly have a great reputation and track record, may be comforting, but it has no bearing on whether an investment is sound. Even in franchising, as Managing Director of Sandwich Baron, Sally J’Arlette-Joy shares, family ties can bind you too tight.

Unfortunately the old adage of ‘family and business don’t mix’ rings true in most cases, with statistics shared by the Family Business Unit (FBU) at the Nelson Mandela Metropolitan University in Port Elizabeth, indicating that only 30 – 33% of family businesses worldwide survive past the first generation, with only 4% surviving the third generation.

What do these statistics say and why are family members struggling to make business work? Is it the familiarity that makes family members loosen the reins on their responsibilities? The emotions that are involved that cause them to act too suddenly on their feelings? Whatever it may be, it is evident that when family and business mix, sparks often tend to fly – and not always in a good way.

Yet, history has proven that there are examples of businesses where families secure success for many generations. Whether they build a business empire from scratch as was done by Michele Ferrero (who established his world renowned chocolate confectionary brand that was made even more famous by his sons), or if it is improved on after establishment – as proven by first Ernest then Harry and then Nicky Oppenheimer.  There is no doubt that if the commitment is there, that family can make a business – as much as they can break one.

Fortunately the franchising model does offer great support to business owners, thanks to the set rules and regulations that are put in place. While the owner/s will still have the responsibility to run their own business, the guidelines that are provided in the franchise agreement do supply more structure to the business than another business models generally would.

Of course, even with a tried and tested recipe in place, there are still some pointers that family can follow to ensure that their investment in the future can actually be carried over to the next generation.

Here are a few guidelines to follow:

  1. Set clear boundaries. It’s easy for family members involved in a business to talk shop 24/7. But mixing business, and personal life will eventually create tension. Set boundaries between business and family time.
  2. Divide roles and responsibilities. While various family members may be qualified for similar tasks, duties should be divided up justly to avoid conflicts. Big decisions can still be made together, but it is important that each member knows their role and takes responsibility for it.
  3. Treat it like a business. A common pitfall in a family business is placing too much emphasis on “family” and not enough on “business.” The characteristics of a healthy business may not always be compatible with family harmony, so be ready to face those situations when they arise.
  4. Play fair. Qualified family members can be a great asset to the business, but favouritism needs to be avoided. Don’t set standards higher or lower for family members than for other staff.
  5. Don’t provide “pity” jobs for family members. Employment should be based on what skills or knowledge a person can bring to the business and not on a feeling of sympathy or entitlement.
  6. Require outside experience first. If your children will be joining the business, make sure they get business experience elsewhere first to give them a valuable perspective on how the business world works outside of a family setting.

Business and family can mix, it is evident in our Sandwich Baron group as is the case with our Rivonia and Rustenburg franchise owners that have family members working towards the same goals and in the same direction. It is possible for blood to be thicker than water and for family businesses to succeed – just ask the Ackermans who started Pick ‘n Pay or the Ruperts who started the Rembrandt Group (Remgro) who own luxury brands Rothmans, Alfred Dunhill, Cartier and Montblanc and in South Africa, La Motte and L’Ormarins wineries, and who partially control the Stellenbosch Farmers’ Winery and Distillers Corporation.

Opinion piece shared by PR Worx.

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