In or Out - The Issue of Family Businesses

Written by Alon Braude, CEO of Think Ahead Ltd. and author of THINK AHEAD about people families and business

Whether or not to enter the family business is one of the most elementary questions that an offspring will have to encounter. One must decide whether he would like to work elsewhere, focus on education, or incorporate himself in the family business.

When you enter a family business, you are automatically labeled by those who surround you. In father's business my success will always be perceived as a result of my family relation rather than my ability. Perhaps I will be better off starting my career elsewhere, I could make a name for myself in a different industry and later enter the family business with a sense of success and experience.

An additional element of concern can come as a result of the father himself. Will your entrance into the family business disturb your father? Is your father really interested in the incorporation of his children into the business? Or would he prefer that you stand aside and provide him with a few more years in charge? Your entrance into the business may expedite his retirement, is that something that you want ?

When you continue to review all aspects of your entrance into the family business you may come across even more of these questions. Is your father strong and capable enough to incorporate a new family member into the business without stifling that family member’s abilities and ideas? Will your father be able to serve as a mentor to you, allowing you to learn from his knowledge and experience ? And if so, are you capable of listening to your father and excepting his methods and knowledge that brought the business to the point in which it is? Or will you be constantly preoccupied with criticism of his actions and mistakes.

How will your entry into the family business be accepted by other siblings that are already active members of the company? Are you going to serve as a positive addition to the company and strengthen the business, or will you simply act as an obstructing force that needs to be dealt with by limiting your responsibilities, actions and aspirations?

Your father and siblings may not be the only source of concern. What of your mother ? What would she say in the matter ? Would she plead for you to enter the family business, with the claim that otherwise you would break your father's heart ? Or would she understandingly tell you to do what is best for you, emphasizing that the company simply exists as an option that can allow the family's standard of living to be improved ? And what does she mean by this ? Is there some kind of subliminal message entailed?

If you do choose to apply yourself in a different business, even more questions may arise: Will you not be making a mistake ?
By doing so are you relinquishing your entitled prerogative to a share of the family business?
Will your sibling that works in the company now receive your share as well ?
What will be your part in the family business if you choose not to venture in that direction ?
Will your father state that only those who work in the family company will own a share of it ?
Will you be part of essential decision making in the company despite not being an active partner in the business ?
Will your family assist you in the formation of a new company, and how significant will this assistance be in comparison to the resources put forward for the family business?
Will your father ever support you in the formation of your own business, putting the growth of your company before his ? And if he does, who will be the owner of the new company? Does all the financial assistance put forward by your father serve as a loan that needs to be paid back once the company begins to turn a profit ?
Was this assistance simply an investment on your fathers’ behalf that allows your siblings to eternally be a part of your success?
Will you only be your siblings’ partner in the family business, or perhaps they will now be partners in the business that your parents helped you develop?

Finally, even the parents need to be asking a critical question; if one of the children decides to refrain from entering the family business, could a situation arise in which one child successfully elevates the financial status of the family business while the other child who developed his own company suffers tremendous losses? This scenario would lead to a substantial financial gap among the siblings. Would it not be wiser and fairer for all siblings to be partners in everything that they chose to do? This would allow for the reduction of the risk that failure would lie solely on the shoulders of one of the children.

If you are contemplating any of these or other questions, I would be delighted to learn of your insights and comments to this article.

Good luck,

Alon Braude
C.P.A. M.B.A
CEO of Think Ahead Ltd.

All rights reserved to Think Ahead Ltd