Q: Hi Steve: My sister wants me to go into business with her – she owns a bridal shop and it sounds like a lot of fun. The thing is, I don’t want business to get in the way of our relationship – we’re real close. How do we make this work?

Trisha

(Part 1 of 2)

A: About three years ago one of my brothers and I started talking about working together. I knew that he was a terrific salesman and marketer, that he had a lot of drive and worked well on his own, and that I could really use his marketing expertise.

I also knew that he was, well, my brother.

The rewards seemed obvious – I would get to work with some one I knew so well, trusted implicitly, and had a good time with. But the risks couldn’t be overlooked: What if it didn’t work out? What if business interfered with our personal relationship?

Despite these few concerns we dove-in and I am happy to report that it has worked out swimmingly for us both.

But I also know that that is not always the case, and so in order to better understand the dynamics of family businesses and how best to answer your question, I spoke last week with two of the country’s leading family business experts.

Barry Cain is the managing director of the one of the top family business consulting firms around, the Blackman Kallick Family Business Center in Chicago. Brad Schneider is the director of the Center. Blackman Kallick has worked with family-run businesses for over 40 years and is the largest independent consulting firm in Chicago. Moreover, both of these gentlemen worked in family businesses, and both consult with family businesses on a regular basis. These are two guys who really know their stuff.

When I asked what it took to run a successful family business, they pointed to several factors that distinguish the most effective, successful family businesses:

It starts with a good plan: While strategizing is important to any business, it is doubly-important to the family business. Proper planning involves everything from grooming and developing the next generation of leaders well in advance to formulating a succession plan that works for the business and the family.

1. Cain and Schneider emphasized just what an incredible opportunity awaits many members of the younger generation of a family-owned business. Where else do you have the opportunity to influence the business at a young age? Where else are the opportunities so great? A good family business plan emphasizes such opportunities while also steering the business in the right direction.
   
2. Boundaries are essential: This is an issue that came up repeatedly in our discussions. There has to be clear distinctions between family issues and business issues. Business cannot be discussed whenever the family gets together; not only can it burn-out the business members of the family, but it is unfair to the kin who are not part of the day-to-day operations of the business. So it essential that
   boundaries between family and business are set and enforced.
   
   
3. Communication is critical: If you plan on grooming your son to take over the business, employees and new hires must be told of that. But, Cain and Schneider note, any family member who is promoted must be qualified and not “anointed” as the latter will hurt the business.
   
   
4. Don’t kill the goose that lays the golden egg: The important thing with a family business I was told, is the word “business.” Treat it and run it as a business, while, of course taking family considerations into account where appropriate. Don’t let family issues run get in the way of the entity that provides everyone’s livelihood.
   
   Moreover, remember that “being fair is not the same as being equal.” Say you have two daughters in the business. While you might want to treat them both equally, if younger one is more competent, the fair thing for the business is to promote her, even at the expense of her older sister. Being fair is more important than being equal. Similarly, even though it might be “equal,” to pay all family members the same, or even the same as non-family members, it is unfair and unwise.
   
5. Get some outside perspective: Finally, Cain and Schneider note, when intractable conflicts do arise it is usually a good idea to either take it to a third-party mediator or to your independent, non-family, board of advisors. Getting an outsider’s perspective can be invaluable.
   
   Next week: The brothers Floom.
   
   Today’s tip: The bottom-line, according to these experts is this: “Never abuse the business for the family, and never abuse the family for the business.”