Five Reasons Why Family Business Advising Isn’t for Everyone
By Kyle Danner
Despite what you may think, you ARE a family business advisor. With at least 20% of the businesses in the United States being family-owned, it’s practically impossible to avoid them. And you shouldn’t! Why miss out on this much opportunity?
So instead of avoiding family businesses, go in with your eyes open. These are a few of the unique challenges advisors face when working with family businesses.
So we put off a decision with the intentions of and go back to what we’re working on. Then, Monday rolls around and procrastination follows. We get busy. We forget about it. We tell ourselves, "There's always next Monday."
1. The Advisor’s Baggage
Call it your baggage, your issues, or your head trash. Advisors carry their personal lives with them, and that can be problematic when you’re working with family. Helping family businesses can certainly trigger memories of your family. That, in turn, colors your perception of your client.
If the father dotes on his daughter, like your father doted on your little sister while being hard on you, that could very well affect how you view the daughter’s ability to be the successor. Or, if the parents’ constant arguing dredges up painful memories of your parents fighting, you may not react in the best way.
This doesn’t mean you have to see a therapist to unpack your baggage. It just means you have to be aware that your family history may affect how you approach your client.
2. Hidden Agendas and Family Secrets
It sounds more ominous than it usually is, but every family has secrets and everyone has their agenda. Keeping secrets is a way to preserve family harmony. Hidden agendas are a way people maneuver to meet their needs without directly advocating for themselves. Both secrets and agendas allow family members to interact with one another while bypassing the hard conversations. Neither is ideal, but they’re a fact of family life.
As an advisor, recognize these secrets exist and respect them—especially when family members confide in you. If the secret interferes with your work as an advisor, then say so. When it comes to the hidden agenda, your role may be to help a family member clarify what they need and then offer resources on how they can speak to their loved ones. In either case, resist the urge to reveal the secret or speak on behalf of a family member.
3. Family Obligations
Family members join or stay in the business out of obligation. They do so because they feel it is what’s expected of them, even if no one tells them they have to. Family members in the business have beliefs like:
- I’m doing this for my children.
- Mom and dad want me to carry on the business.
- I don’t want to disappoint anyone.
- I’m supposed to take care of everyone.
- Will mom and dad still love me if I leave?
This sense of obligation can lead to decisions that don’t appear rational. For example, a family member gets a job they’re ill-suited for or the family holds onto the business when selling would be a better option. When this occurs, shift the focus from the business to preserving the family wealth. Resources can be used to help loved ones find more fitting careers or uphold the family legacy through philanthropy or new business venture.
4. Role Confusion
In the family business, your client may find themselves confused about who they’re supposed to be. When are they the concerned mother and when are they the hard-charging business owner? Or maybe everyone, including legacy employees, first knew the client as “Daddy’s Little Girl.” Now, they’re struggling to leave that behind so they can be seen as the capable, future leader of the family business.
Family members don’t always give much thought to which hat they’re wearing (family or business) or how their roles change as everyone ages. Advisors can create clarity for their clients by asking, “Are you speaking as a business owner, manager, or family member?” That will help family members be mindful of their role.
5. Enduring Relationships
Conflict is a big part of family business, and it’s the part that everyone likes to talk about. Everyone else but the family, that is. Family drama makes for great soap operas. However, much of the literature on conflict management overlooks a key aspect of family business which is the enduring relationship.
They may tell you how to resolve the conflict, but they won’t tell you how to get along afterward. Even with everyone’s best efforts, there are still wounds that need time to heal. That’s made difficult when your client offices next to the person, or sees them at dinner on Sunday or when they come home at night. Whatever solution you offer to resolve conflict, remember that you must consider the reality that they’ll continue to interact with and see each other after.
When the Challenges Feel Overwhelming...
It’s normal to feel overwhelmed while advising a family business. There’s more at stake than just the company. Love and money are wrapped up together in a messy package. And as an advisor, you genuinely care about and want to help your client.
If everyone feels overwhelmed and things are tense, it’s easy to focus on what’s wrong. When that happens, take a walk down memory lane. Ask a family member to tell their story. Even if everyone has heard it before, it’s a break from the tension and a reminder of what they built together.
Or, ask them what they accomplished in the last year. Family businesses are notorious for focusing on what’s left to do rather than what’s done. Either approach shifts the focus to the bigger picture and reminds them they’ve overcome obstacles before. They’ll certainly do it again.
And remember: being a family business advisor may be challenging, but it’s also extremely rewarding, and the rewards of seeing the family succeed make all the difficulties well worth it.
I’ve been a family business advisor for years now, so I understand just how complicated and rewarding the process can be. That’s why I have created a library of tools, strategies, and tips you can follow to resolve conflict in your engagements and keep your clients happy.