5 Tips to Running a Successful Family Business

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Is working with family members a dream come true - or a complete nightmare?  This all depends on how the business is run and how well the relationships are maintained within it. 

There are plenty of stories to defend both sides of this argument; some leading to legal action and deterioration of family ties while others achieve great success working with family and pass on the business through multiple generations.

The term “family business” contains a widespread group of different businesses, from multi-national chains to local corner store shops and a wide range in between. The key to a successfully run family business lies in a few core responsibilities that are universal, regardless the size of the company and the family members that comprise it.

In most ways, working effectively with members of your family isn’t much different from working with any other business partners. Being brothers, cousins, sisters, father-son/mother-daughter, etc. isn’t enough to make a business partnership work. It takes an approach that encompasses some principles, which can be found below, courtesy of CNBC.com.

1. Communication is everything. Communication is the key to good relationships of any kind. With family though, it can take a little more effort, as there are often dynamics at play that make communication more complicated. We can have a tendency to feel like a loved one knows us so well that we shouldn’t have to voice our feelings or expectations. But if you want your partnership to work, it’s important to let go of these assumptions and communicate clearly and openly, just as you would with a non-family business partner.

2. Expectations need to gel. To a large extent, this point goes back to communication. Specifically, it is vital that each partner’s expectations regarding their role and those of the other partners are communicated clearly. Again, assumptions are a killer. Lay out what each of your roles will be in the business before starting. Voice what you expect from your partner(s), and put it in writing to solidify it.

3. A formalized business relationship is best. However strong your relationship is now, you’re bound to have disagreements with any business partner. Drawing up a written agreement for your partnership (and including the expectations from #2 above) is a must. Some entrepreneurs are reluctant to take this step, as it may seem as though a written agreement demonstrates a lack of trust. On the contrary, a written agreement for a business partnership is simply good business and is designed to protect all involved parties. The bottom line is that you’re much more likely to be sorry you didn’t create an agreement than that you did.

4. Priorities are important. We all want to be successful entrepreneurs and make a lot of money, or change the world. But it’s important to prioritize your family relationships over business. It’s heartbreaking to hear of families that have been ripped apart by financial or business disputes. At the end of the day, you can build another business or make more money, but you’ve only got one family for life. Remembering that can help put disagreements into perspective and avoid the nasty fallout of a family business gone badly.

5. All-business is no fun. Although you might have a lot of fun working your business with family members, it’s important to set aside “family-only” time too. If all you ever talk about is the business, not only will your relationship eventually suffer, but you’ll drive the other members of your family crazy! Take time out from business to do the things you would do together if you weren’t business partners. Try going out to lunch or for a round of golf without talking about business at all. If you do what it takes to maintain a strong family bond, it will only serve to support your working relationship.

Is working within your family business a dream come true, or complete nightmare? Let us know on the Continuity Family Business Consulting Facebook Wall, linked HERE. 

For more information on Continuity FamilyBusiness Consulting, visit our website: ContinuityFBC.com.

When Working In a Family Business, Having to Prove You Deserve to be There is a Job in Itself!

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There are hardening pressures when working in a family business, having to prove you deserve to be there, not entitled to the position because your father owns the company.

Eliza Browning is the VP of Crane Digital, where she oversees the company’s online business and digital strategy. Before joining Crane Digital, Eliza worked in digital media for news organizations including CNN, ABC News and the AP, never imagining she’d end up at her family’s business.

Crane & Co., was founded in 1801 in Dalton, Massachusetts. It’s one of the oldest family companies in the country, with ownership recently split between family and private equity shareholders. Eliza never thought she’d work there, but when she decided to make a career move, she needed to prove herself.

“When I came back to the company that’s been part of my family for more than two centuries, to open a New York office and lead Crane’s digital business – I wanted to prove myself,” says Eliza in an article for INC.com. “I pushed myself harder to show that I could lead the division in a new direction – not because of who I was, but because of my skills and experience. I wanted people to see me not as a Crane, but as another employee.”

To be accepted and most importantly respected by her colleagues, Eliza needed to be more capable than non-family members, which meant putting in longer hours with frequent weekends in the office. “They weren’t required by my managers or peers, but I required it of myself,” says Eliza.

About a year into her time at Crane & Co., a fellow co-worker called Eliza “stunned and embarrassed” to say she had just found out she was a Crane family member. “I laughed and told her it was the best compliment I’d been given since joining the company” says Eliza.

How was your transition into the family business? Did you feel the pressures Eliza did? Share your experiences with us on the Continuity Family Business Consulting Facebook Wall, linked HERE.

Developing Next-Generation Leaders

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One of the most common mistakes advisors makes when preparing families for business succession planning is they often narrow their focus to the single individual that they deem most capable of running the business upon a CEO’s retirement.  To truly make sure that families retain their core values while maintaining strong corporate governance and sound strategic planning, advisors should consider all next-generational family members and groom them to fit individual unique leadership roles. At Continuity Family Business Consulting, we focus on all members of the business. 

Many Next Generation (NextGen) family members are ill-prepared to take on the responsibilities of leadership roles in their respective businesses.  This can easily be avoided if the NowGen helps the NextGen family members develop a trifecta of core traits that are essential to running a business, which are self-confidence, an internal definition of success and people skills.

Below is how each of the trifecta of core traits is defined in the blog article Developing Next-Generation Leaders on FFI.org. 

Self-Confidence is achieved when someone deeply understands who he or she is and where his or her strengths lie – knowledge essential to navigating the challenges life presents.  Unfortunately self-confidence cannot be taught in a short period of time it is developed over years, from personal conquests and sometimes yielding to life’s obstacles.  Far too often, however, NextGen members lack self-confidence due to the fact that they’ve been sheltered by the life style that allowed them to enjoy wealth and a security blanket of their parents, and most times both.  It’s never too late to change, through 360 evaluations mentoring and peer-to-peer counseling, NextGen family members can restructure their perception of their strengths and weaknesses and learn how they can achieve overall improvement.

Many children are not given much of a choice or are pressured into following in the family business and do not have a chance to accurately express themselves and pursue their passions.  This can be very subtle for example including work in their day to day conversations perhaps around the dinner table every night.  Children are asked less often how their day went leading them to believe that they can only win their parents recognition by expressing interest in the family business.  When this child matures and eventually enters the work environment in the family business they experience feelings of entrapment.   As advisors, we must help NextGen family members establish their own definitions of success by expressing interest both inside and outside the family business.

Successors are often ill-prepared to manage the complex inter-personal relationship dynamics intrinsic to the family business environment.  A well rounded set of skills is essential to running a successful business.  For example one with outstanding technical skills may flounder when it comes to resolving conflicts of understanding workplace behavior, people skills are essential to running the family business at an optimal level.  As advisors we must also help NextGen family members round out their social skill sets by furnishing them with tool chests of communication and conflict management strategies, while giving them a forum with which to practice these skills before they officially assume leadership positions.

Family members must generously invest in the next generation with time, money, energy and wisdom from their own lives if they expect successors to advance a legacy of integrity and value.  Continuity Family Business Consulting can help both the NowGen and the NextGen prepare for the next steps within the family business structure. For more information, visit ContinuityFBC.com or call us at 877-925-5149.

Managing Change and Transition Within A Family Business

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Change, and the need for change, is constant.  Sometimes change is predictable and sometimes it happens when least expected.  

Family businesses present unique structural and emotional obstacles to change.  Helping stakeholders expand beyond their comfort zone and find new ways to both contribute to, and benefit from, the family business are often crucial elements of Continuity’s work. 

Our specialists conduct training programs and provide presentations for family business executives, attorneys, mediators, financial advisers, psychologists and for professional societies. Programs can range from one hour in length to a fully day, and are always tailored to the needs of the audience/client, and cover multiple topics within family business, including managing change and transition. 

For more information on our training programs and consulting services, please visit ContinuityFBC.com, or call us at 1-877-925-5149.

Cheesecake Factory CEO Took His Family Business Nationwide; and It All Started With a Piece of Cheesecake!

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David Overton thought he was going to be a famous rock star. When that didn't work out, he decided to tap into his family's business and capitalize on their delicious products. Last week, David Overton was named a regional entrepreneur of the year by Ernst & Young as founder and CEO of The Cheesecake Factory.

The following article was originally published in the LA Times titled "Cheesecake Factory CEO took his family business nationwide." Click HERE to view the original article on LATimes.com.

The gig: David Overton, 66, is founder and chief executive of Cheesecake Factory Inc., based in Calabasas Hills. The publicly traded restaurant company has about 170 eateries, and last year it earned a profit of $95.7 million on sales of $1.8 billion.

Last week Overton was named a regional entrepreneur of the year by Ernst & Young.

Humble beginnings: In the 1970s his parents started a food business in Detroit, specializing in cheesecakes. "My mother got her cheesecake recipe out of the newspaper," Overton said. "She always wanted her own business, and she worked very hard. My father was great at sales."

A different drum: Overton started playing drums professionally at age 15 and helped put himself through college at Wayne State University in Detroit. He went on to UC Hastings College of the Law in San Francisco, dropping out during his first year to pursue a career as a musician.

At age 26, realizing he was not going to be a rock star, he moved to Los Angeles, where his parents had relocated their business. At that point the Cheesecake Factory, as they called it, produced more than 20 kinds of the cakes and other desserts to sell to restaurants and other wholesale accounts.

Turning point: "We knew we had the Cadillac of cheesecakes," Overton said, but they had a tough time persuading restaurants to take more than one or two flavors. So he decided to open his own restaurant in Beverly Hills that would also sell salads, hamburgers and other entrees. The cheesecakes were promoted as the main event.

"I wanted to prove to other restaurateurs that people would enjoy a restaurant with a large dessert menu," he said. "I thought if I could take my parents' cheesecakes direct to the people, it would do well and other restaurants would follow."

The first Cheesecake Factory restaurant opened Feb. 25, 1978. "We started strong," Overton said. "A line formed within the first 10 minutes. The cheesecakes were a huge draw. Back then, we had 12 varieties. Now we have 50."

Sticking with it: "Shortly after I opened our first restaurant in Beverly Hills, a relative congratulated me on the successful opening and told me I should sell the restaurant and go do something else," Overton said. "He said I could probably make $50,000 if I sold. Somehow I just knew I wasn't ready to sell — and 34 years later, I'm certainly glad I didn't."

New outlets: With the success of the restaurant, he started to evaluate locations for expansion. He said the best advice he ever got was to not jump at a site just because it could be gotten at a bargain price. "Never let the deal drive the site. Let the site drive the deal," he said.

Focus groups: He doesn't believe in them. When it comes to food choices, Overton makes the decisions. "My taste buds represent that of the regular people we have dining at our restaurants," he said. "If I love the food, it goes in the menu."

Portions: Cheesecake Factory restaurants are known for serving huge portions of food that is often high in calories and fat. Even the menus are huge. "We have always said that whatever America wants to eat can go on the Cheesecake Factory menu," Overton said.

But in the face of increased warnings about obesity, many diners want food that's not so fattening. Last year the chain introduced its SkinnyLicious menu of about 50 items, each with a calorie count under 590. That's not exactly diet fare, but it's far lower in calories than many of the regular menu items.

Has the initiative boosted business? "It's difficult to identify the exact impact," Overton said. "However, it is a very popular and growing segment of our menu."

The next generation: Overton is married and has three sons, none of whom want to work in the food industry. "I would have preferred for my sons to be interested in joining the family business, but it doesn't bother me that they didn't," he said. "They're all very creative, and I think it's most important that they pursue something that they love, like I did."

Still drumming: Overton has drums set up in his house even though he doesn't get to play them much. "I wish I could play in a band, but being the CEO keeps me busy," he said. "I am from Detroit, so I like to listen to Motown sounds."

The Overlap of the Family and the Business and Its Effect on the Entire Family Business System...

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As family businesses develop the next generation of leadership, they must recognize the overlap of the family and the business and its effect on the entire family business system. Although this effect may become more visible overtime, it begins when children are young and parents are trying to find an appropriate work/life balance. Being mindful of parenting styles and how they affect future family business leaders is important. 

“Parenting affects the future of family businesses as it teaches the capacity to communicate, to think outside one’s own interest, to make decisions, to seek consensus and to want fairness and justice for others,” (timesofmalta.com). 

The close emotional bond between parents and children seems to be responsible for the way they apply leadership roles according to attachment theorists. Children apply previous patterns of interaction within their own family to subsequent leadership roles. 

It is thought that consistent parenting during childhood is associated with secure adults with high self-esteem. Inconsistent parenting, on the other hand, is thought to engender adults with low self-esteem who have less confidence in their performance. 

Family business owners are faced with “ultimate challenge” of building their company while simultaneously raising their children, who ultimately may lead their company. It is a juggling act that takes a sense of purpose, balance and some luck to keep all the balls in the air. 

Is your family business worried about parenting the next generation leaders in your family business? Let us know on the Continuity Family Business Consulting Facebook Wall, linked HERE.