Five signs you need a family business consultant

The business of family is hard. A family run business is even harder.

Family-owned and operated businesses are part of the American fabric. Whether it’s the Waltons of Walmart or the family bakery on the corner, a family business instills a sense of pride. Creating something that can be passed down from generation to generation is a desirable legacy — and if done correctly, can ensure a family will thrive for generations to come.

But as anyone who runs or works in a family business will tell you, it’s not all roses. In a family business, the “family” can bleed into the business with disastrous results. Managing family dynamics within a business can be incredibly challenging but imperative to success — especially if your family business is about to pass from one generation to the next.  A family business consultant can help. But do you need one? Here are five signs you might.

Lack of Honest Communication

When multiple members of a family work together, they must be able to bring honest criticism and feedback to each other, and they must be able to communicate their opinions, their concerns and their feelings. In my role as a family consultant, I consistently encounter families whose lack of communication leads to resentment, infighting and worst of all, a toxic work culture for family and non-family employees alike. In cases where the communication problem has festered for months or years and each individual is dug in, a family business consultant

When current and future leadership are at odds over the direction of the company and fail to discuss their differences, the stalemate can linger, eventually creating a toxic environment.

can bridge the communication gap and get everyone moving in the right direction. 

Resistance to Change

The generational battle of ideas is a tale as old as time — but it can be extremely damaging to a family business. The older generation — often the generation that started the business — may be resistant to change what has clearly worked. The younger generation — those in line to take over leadership — often have the desire to shake things up and prepare the business for the future. Who is right? Often, it ends up being a combination of two or more philosophies. In order to come to that conclusion, however, family members must shed their resistance to change, and clearly communicate their reasons for their positions.

A Directionless Future

When current and future leadership are at odds over the direction of the company and fail to discuss their differences, the stalemate can linger, eventually creating a toxic environment. And it’s not just about family members bickering over how to run a business. It’s about the other employees — people with families they need to support — who will become concerned and even fearful about what lies ahead. In business, consistency is key.

Lack of a Succession Plan

Far too often, family businesses not only lack a succession plan, but the issue has never even been discussed! When the leader of a family business nears retirement age, his or her kids working in the business want to know who will be next in line to lead. Many family business leaders are hesitant to talk about a succession plan because they have not yet accepted that eventually they will have to relinquish control. But failing to establish a succession plan creates a power vacuum and a wave of uncertainty and fear among both family members and non-family employees. Open communication and a succession plan are imperative.  

The Knowledge Silo

Many family business leaders are hesitant to talk about a succession plan because they have not yet accepted that eventually they will have to relinquish control. But failing to establish a succession plan creates a power vacuum

If the leader of a family business is the “Wizard of Oz” — the only one who knows the secret sauce to how the business is run — what happens if the Wizard of Oz suddenly disappears? Keeping the institutional knowledge of a business close to the vest is risky, yet happens far too often in family businesses. Those who have built a business on their own can be reluctant to share their secrets. Not because they don’t want anyone else to know, but because they simply don’t trust anyone else to do what they do. Sharing this knowledge with the next generation of leadership though, is crucial.

Is Your Business Ready for Family Business Consultant?

If you think your business could benefit from hiring a family business consultant, start researching consultants and find one you think fits your style. It’s important to find a consultant you think everyone involved will respond to. A great place to start is the Family Firm Institute — an organization of which I am a fellow. You’ll find a comprehensive directory of reputable professional family business consultants that can help you guide your family business to a prosperous future.

Denise P. Federer, Ph.D. is founder and principal of Federer Performance Management Group. She has 29 years of experience working with key executives, business leaders and Fortune 500 companies as a behavioral psychologist, consultant, coach and trainer. Contact her at: [email protected]