5 Problems Business Advisors Face When Working With Family Businesses
By Kyle Danner
This blog includes excerpts from my book "The Advisor's Guide to Successful Family Business Engagements." Purchase a full copy of the book for more tips on how to manage family business drama, keep clients happy, and earn positive referrals.
It’s impossible to be an advisor and not work with a family business. It’s one of the most common ways to organize a business. Consider that one in 5 businesses in the United States is family-owned.
Furthermore, the demographic tsunami of retiring Baby Boomers means business owners will need your services to help them exit their business. The opportunity is too big to ignore.
Working with family businesses certainly has its perks. However, it also comes with its fair share of problems. To be an effective advisor means to be aware of the common problems you’ll experience working with family businesses.
These are the top five I’ve seen throughout my career as a family business advisor.
1. Families are reluctant to ask for help
Family members are protective of one another and the family as a whole. They’re suspicious of outsiders (that’s us advisors). They fear being seen as dysfunctional or judged for whatever challenges they’re facing. As a result, they hesitate to ask for help, even when they really need it.
As an advisor, this can put you in a difficult position. You want to help them succeed, but you don't want to overstep your boundaries. You'll have to tread lightly when making big suggestions for the business and keep in mind the family may not be as receptive to your advise.
2. Families avoid difficult discussions
Protecting one another includes avoiding difficult, emotional discussions. Part of this avoidance is not wanting to confront a loved one, like an underperforming family member or overbearing business-owning parent. The other part is not wanting to look in the mirror and admit their part in the situation.
If your client shuts down in the face of confrontation, take a step back. Remember how difficult it can be to admit there's a problem, especially when family is involved. Try to approach the subject in a different way.
3. There’s family drama
The effort to protect the family (see point 1) and avoid difficult discussions (see point 2) leads to family drama. The more families protect each other by avoiding what’s difficult, the more tension builds and leads to more drama. It’s a vicious but predictable cycle. Usually, a crisis like a medical emergency or major family argument forces the issue to come to the surface.
When you find yourself in the middle of family drama, keep your own personal history in mind. Often, our own family drama affects the way we see problems. Try to stay objective as much as possible and avoid putting the blame on anyone.
4. There are hidden players
It’s happened to you before. You leave a meeting thinking you landed a new client only to find the business owner ghosts, ignoring your phone calls and emails. You realize that maybe you weren’t talking to the real decision maker or key influencer. Someone else like a spouse or sibling might really be pulling the strings.
If you suspect someone else is a decision maker in the business, the best thing to do is to keep everyone involved in the process. When you have important meetings, loop in the other family members. Establish relationships with everyone, not just the person who hired you.
5. Your family’s drama plays a role, too
Whether you realize it or not, your family’s drama affects how you see your client. You tolerate working with the annoying sales manager/son because you admire the visionary business owner/mother, much like your little brother annoys you and you love your mother. That’s to be expected. Your family is the first place you learn how to get along with others. It shapes your relationships with others for the rest of your life.
As mentioned earlier, your family's drama will affect the way you view drama in the family business. So keep your emotions in check and keep a close eye on your perspective.
Resolving The Problems & Helping Your Clients’ Business Succeed
Despite the problems that come with advising family businesses, it’s not a reason to avoid working with them. Instead, going into the engagement with your eyes open, aware of these problems, puts you in a better place.
When you know what to expect, you can keep an eye out for problems before they surface and take active steps to resolve the problems quickly. Here are some things to keep in mind:
Create a safe space where the family can open up about their problems when they’re ready.
Follow my tips to encourage the family to have that difficult conversation so the family can move past it.
Address the elephant in the family business before it turns into unresolvable drama.
Identify the true decision makers in the business and involve them in important discussions.
Be aware of your own personal biases and take efforts to remain as impartial as possible.
Dealing with the family’s drama is much easier said than done. My book, The Advisor's Guide to Successful Family Business Engagements, will teach you how to guide your family business clients through the difficult discussions. Click the button below to get a copy from Amazon.