The family business -- functional or not?

2012-12-30T00:00:00Z The family business -- functional or not?Larry Galler Times Columnist
December 30, 2012 12:00 am  • 

Over the years I have seen many family businesses with just about every imaginable combination of family members and every combination of ownership, even some that could be construed as bizarre combinations:

* Spouses -- some former spouses -- owning a business together

* Parents and child(ren) owning a business together

* Siblings owning a business together

* Any of the above permutations, with the addition of in-laws (which tend to exacerbate complications)

Some work brilliantly, others fail dysfunctionally.

When family businesses work well there probably isn’t a better method of running a small business because it is based on a unified vision, mutual trust, love and respect. Goals and responsibilities are agreed to and everyone pitches in to build their mutually owned financial future. Differences of opinion are discussed as rational business issues instead of emotional family tantrums, squabbles, arguments and fights.

When family businesses don’t work well, many of the root causes go back to feelings from real or imagined past slights, favoritism and ego gratification. Of course the same issues are present in nonfamily businesses but it is more difficult for a person to leave or be excused from a family business because, except in extreme situations, the family relationship trumps the business relationship.

This is particularly difficult when one family member isn’t pulling his or her weight and doing substandard work feeling (often rightly) he or she can get away with it because “I’m family.”

Reconciling a dysfunctional family business situation can be much more difficult than in a nonfamily business because family emotions run much deeper, hurts and slights last much longer and can even be passed down to subsequent generations.

The first step toward a successful family business is having everyone involved develop and agree to a unified vision, the management structure, the role(s) each family member will play, and who will be responsible to whom. Unless these important foundational steps are agreed to, a family business can quickly devolve into something like the squabble over which kid on the couch should control the TV clicker.

Successful family businesses are based on mutual agreement, not on who can shout the loudest.

Opinions are solely the writer's. Larry Galler, of Larry Galler & Associates, is a marketing and management consultant for small and mid-size companies. Read Larry's free special report, “The Performance Review - an opportunity to elevate the performance of the company.” To receive it just send an email to and put “Performance” in the subject line.

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