Joining a family business isn’t for everyone. It’s a risky decision that needs a lot of careful consideration. You might build a successful dynasty that grows into a Fortune 500 company, with generations of family continuing to lead the business. Or, like the vast majority of family businesses in the U.S., your business might not make it to the second or third generation. Even worse, your family dynamics could break down, leaving a legacy of dysfunction that long outlasts the business.
So how do you decide whether to join a family business? The next generation should consider six key issues before diving in:
There can only be one CEO: If you’re in the second or third generation, there may be siblings and cousins all hoping to take over as CEO. Who is competing for those positions? Is your cousin the “golden child” of the family? Are you the most qualified? Are there family politics involved?
Consider working outside of the company first: By working at a different company, you’ll gain experience and knowledge – not to mention objective feedback and evaluations.
Give yourself permission to walk away: You need to ask yourself if working for the family business is what you really want to do or if it is preordained. If you decide to walk away, be prepared for some emotional fallout.
Would it be better for the family to stake you in your own business?: In some cases, you might achieve more in your own business. This is often the case for family members who are real hard chargers – the ones who inherited ambition from the family founder.
Realize the complexities of a family business: Family dynamics can be challenging enough without integrating business issues. Sometimes young people refuse to see these dynamics. Or they have seen it all too closely, like when their mother complains to their father that a brother’s wife has a fancier car.
Recognize the risk of going into the family business: There can be severe downsides to going into a family business related to siblings, positions, titles, power, and money. The good news is that there are ways to avoid or minimize those downsides through communication, good governance, a commitment to succession planning, and talent development of younger family members.
When a family business works, the future can be very bright – and for more than just three generations. But it’s not a decision to be taken lightly. Make sure you’ve evaluated the pitfalls and hazards to ensure the highest likelihood of success.
Source: Kurzina, Peter, Forbes, February 13, 2017, http://www.forbes.com/sites/groupthink/2017/02/13/should-you-go-into-a-family-business/#173c71eb6cb1