Small Business: Money & Management

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Family-Run Businesses Cut Both Ways

Laura Moran

Some family businesses are very successful and others tank almost immediately. While it can be hard to determine what will and won't work, there are a few things to keep in mind that may help keep the business afloat.

"Go into a family business with your eyes open," says David Javitch, president of Javitch Associates. It is important that everyone in a family business understands their roles in the company.

It is also important to understand the difference between a work relationship and a family relationship, says Martin Lehman, marketing director for SCORE, which provides consultations for small business owners. "Business is business and family is family. During the day it's business but when the door to the office closes at 5 p.m., the relationship goes back to being family."

Flipping that relationship switch is not always that easy. Marci Alboher, a career columnist for the New York Times and author of "One Person/Multiple Careers" says business relationships often become more complicated when the partners live together. Whether it is husband and wife or mother and daughter, she says that when business partners also share a roof, they never get a break from each other.

Some of these partners turn to counseling. Just as married couples with problems in their relationship seek professional help, so do business partners. Counselors are often able to guide their clients into successful partnerships, and they are also able to identify some red flags in a family business plan.

"The biggest problem [in family business] is history. People have to make sure they can put the history aside and not use it against each other," says Kathi Elster, who along with Katherine Crowley, wrote the book "Working With You Is Killing Me."

"There can be a lot of resentment and personal history brought back when things don't go as planned," adds Crowley, who also runs the consulting firm K Squared Enterprises, with Elster.

According to Elster, a business disaster can be prevented if it is detected early. Family members may want to reconsider a shared business unless they have the same financial goals and the same plan to achieve them.

She also suggests that business partners bring different skills to the job. "For instance, one should be good at paper work and finances while the other is good at making business connections and marketing."

Not all family businesses are doomed. Lehman says that with good communication and a firm understanding of the job at hand family businesses can be a great success. "Relatives must understand that they love each other but also understand that they need to respect each other as business partners."