How to Run a Successful Family Business

Since I began Trajectify, I’ve had the opportunity to coach a number of family-owned businesses, from intergenerational companies to husband-and-wife teams. 

In some ways, they face the same challenges as any other business. They have to figure out how to maximize their cash flow, hire the right people, and scale their business. 

Family-owned businesses also have their own particular set of challenges. After all, most co-owners have the ability to take off their business owner hat and put on their spouse hat or sister hat or parent hat with someone else. 

Leaders in a family-owned business have to navigate a dual relationship — business and personal. 

So how do you ensure success?

I’ll share what I’ve learned through coaching these businesses as well as insights from a couple of entrepreneurs running family-owned businesses today. 

Boundaries, boundaries, boundaries

Work is not family, and that can be a challenge for family businesses. Business is business, and family is family. You can’t run or grow a business when you’re subject to the different values and cultures that surround family life versus business life. 

People running a family business need to be able to make business decisions without the passion and emotion that are often present in family interactions. 

Sometimes that separation can feel inauthentic. Firm, well-communicated boundaries can help provide clarity about what hat you’re wearing at any given time. 

Jeff Gervasi owns TriState Textile Restoration with his wife Suzanne . They started as employees and ultimately bought the business together after the owner died. 

Now, seven years later, they have a rule: Once they get home, they can only talk about work for about 15 minutes. After that, no more work talk. 

“A big challenge of working with a family member is turning off,” says Jeff. “It can be work 24/7. That was one of the reasons we sought coaching, just trying to navigate the business while effectively talking to each other.” 

Open communication is key

Those time and space boundaries are important, but they don’t always get to the root issue. 

As a family, we accept one another’s shortcomings. In a business relationship, we have far less tolerance for shortcomings. In a traditional business, if the day-to-day business relationship between partners isn’t working, you might part ways. One of you buys the other one out. You move on. 

That’s often not an option in a family business — unless you’re looking forward to a divorce or a really awkward Thanksgiving family dinner. 

We all know the saying “Business is business.” That doesn't mean business lacks emotion, and it doesn’t mean we give up our empathy. It does mean we make decisions in a business differently than the ones we make in our personal life.  

So partners (or employers and employees) in a family business need to get really brave about having those difficult conversations. 

When something isn’t working at the office, you have to be able to sit down and talk about it. Even better, talk about it before it isn’t working.
“When you first start, everything’s great,” says Jeff. “Then you have to think about five years down the road. What if something bad happens? What are the repercussions? You need to have the uncomfortable conversations, the what-if conversations.” 

See: Building a Business with Partners: The Good, the Bad, and the Ugly

Set clear expectations

Family businesses are often small businesses, and setting clear expectations upfront is sometimes overlooked. 

When Josh Fialkoff joined his family’s business, Specialty Box & Packaging, he came on as a consultant first to help with a sales pipeline issue. His brother had been running the business for over a decade. When they decided to have Josh join full time, the conversations were relatively loose, especially about money. 

“In families, I feel it’s harder to talk about money,” says Josh. “You want to be there and support your family, so you don’t talk as rigorously about things like salary. Coming in, I probably would’ve had a more rigorous conversation about compensation.”

Why do that at the beginning? Because, says Josh, “In any business, things get disrupted mostly when expectations are misaligned. Expectations tend to be misaligned if you don’t communicate about them.” 

Finances can be a tricky place for expectations. So can the roles you’ll inhabit on the job. 

Josh thinks his current role as COO would’ve been hard to define at the outset. Still, if he did it over again, he probably would’ve tried to set those expectations. “What we could’ve done is communicate about what my role would ultimately evolve into. I’d probably start no differently, but we’d say, in 3 years, you’ll be the decision-maker in these arenas.” 

“My guess is a lot of small businesses, you just kind of get thrown into the fire,” says Josh. “You kind of have to because there are just so many things to get done and you have a small team to do it.”

Jeff also sees the benefit of better defining roles. At TriState, Suzanne handles more of the day-to-day decision making, but Jeff’s and Suzanne’s separate roles aren’t always clear to the employees. 

“There are times the employee will come to me and ask a question,” says Jeff. “It’s hard because I’m the owner, and I want to answer. But sometimes Suzanne may have already given a different answer.” 

On one occasion, employees arrived at a house to pick up an area rug, and there was furniture still on the rug. The employees called Suzanne, and she told them they had to remove the furniture and pick up the rug. Not liking that answer, they called Jeff, who said they could arrange a later date after the owners had removed the furniture. 

You can guess how that went. 

See: How to Develop Your Core Values (and Implement Them)

Professionalize as soon as you can

Many family businesses start off with loose management styles. The same can be said for traditional businesses as well. The difference is that some family businesses hold onto that style long after it’s appropriate because family values win out over business values. 

An employee who doesn’t pull their weight gets to stay because they’re like part of the family — or an actual member of the family. 

Policies remain in place because that’s how Grandpa always did it, even if it’s not the right policy for today’s workforce or business. 

“With a business that’s been going for 60 years, there’s a tendency to think that because something’s been done a certain way for a number of years and the business has grown, that’s the right way to do it,” says Josh. He wants to find the optimal way to do things — not just the way that’s worked in the past. One of the tools that’s been helpful for him to navigate that in their business is running experiments. Josh tries something for a month or on a limited set of customers to see if his idea creates improvements or not. 

Running the business like a business is critical to its success. 

That may look like bringing in professional management from outside the family, something Josh is considering. 

Or it might be getting management or leadership coaching to develop those skills for you and other members of your leadership team, basically an outside-in, unemotional perspective.

Final thoughts

Many family businesses have been incredibly successful. I think of Philly’s Di Bruno Bros. as a perfect example. They grew their little cheese shop to a company with three different divisions, multiple locations, and hundreds of employees. They did it by treating their business like a business. 

They sought out resources and advice from experts. They focused on their culture and management style. They developed a clear strategy for their future. 

For other family businesses that want to reach that level of success (or surpass it), the key is finding a way to navigate those business and family relationships. We work with family businesses to strategize and develop plans and policies that lead to highly scalable companies. 

Contact us to find out how Trajectify can help your business.