I have a friend who is considering leaving his job to join his wife’s business as a partner in the company. Her business has four employees and she’s doing about a half million in annual sales. She’s a mid-stage three business with solid revenue per employee at about $100,000. She’s been running the business a few years, with my friend helping her as an unofficial employee. Now they’re ready to partner in business to build the company.
He asked me for advice, expecting me to talk to him about sales and marketing, automation, and leadership. Instead, I talked to him about the challenges of family businesses because I’ve spent a lot of time with entrepreneurs who struggle with it. Instead, I told him about three challenges he needs to avoid.
- Communication: Family businesses require great communication, especially when spouses are partners. Issues at home transfer to the office and issues at the office transfer to home. You must have a method for resolving work issues or you will regret working together in the first place. If you aren’t open and honest communicators, you should think twice about partnering in business because you won’t succeed in business if you don’t communicate openly and honestly.
- Arguing at work: Employees’ perceptions of the bosses’ relationship matter a lot, so don’t argue at work. When there are no employees and it’s just the two of you, it’s not such a big deal. But, when employees have all eyes on the bosses, every little issue or disagreement causes a problem in the office. So, yes you need to practice open communication, but make sure you have ground rules about what you do and don’t talk about in front of your employees.
- Role clarity: Be very clear about each others’ roles and responsibilities. This is true in any stage three business, but especially when spouses are partners. The clear division of responsibility is important for the two spouses, but it’s critically important to the employees. If spouses aren’t clear about who does what, the employees will play each spouse against the other the way kids play their parents against each other to get what they want. Looking at it another way, employees need clarity on who they are accountable to. If both spouses are saying all employees are accountable to both of them, there’s a big problem brewing.
I’m an advocate of spouses working together in a family business, provided they communicate clearly, avoid arguing at work, and clearly divide roles and responsibilities. When they do these three things, their family business can be rewarding and successful.
SBS Idea of the Day: Examine your reporting relationships. Does every employee clearly know who they are accountable to and for what? If not, make it clear right away.