Everything you need to know about running a family business

Everything you need to know about running a family business

It’s hard enough to run a company yourself, let alone with people who know every little detail about you. Running a family business comes with challenges that most other company partnerships don’t. Unless you can navigate the often-complex waters of operating a business with offspring, siblings, parents or spouses, then your business won’t stand a chance. Here are five pieces of family business-endorsed advice for making working with your family the fun and rewarding experience it can be

Watch the work-life balance

Work is top of mind for many, but it can be a constant conversation for family business co-founders. Don’t talk shop when you don’t have to

If there’s a cardinal family business-related rule to follow, it’s this: Keep your personal and professional lives in balance. Of course, that’s much easier said than done. Ask any family business owner what’s discussed at a holiday dinner and they’ll all say work. As important as it is to talk about things other than the office with your relatives, it’s even more critical to do it when you’re married to your business partner.

For Stephanie Ciccarelli, the separation can be tough, but too many company conversations and her business and family could suffer. Ciccarelli runs London, Ont-based Interactive Voices Inc. with her husband David. It’s a website where voiceover talent posts profiles and where agencies and directors come looking for the right set of pipes. While both are driven entrepreneurs, the Ciccarellis also know that family comes first.

At dinner, she says, the couple is focused on their two kids and not about the day’s work events. They also make sure that one of them is on drop-off duty in the morning and at football team practice after school. Only after their children are in bed at night does work come up. “We find a way to balance,” Ciccarelli says. “That doesn’t mean we’re not both really into the business, but work at the expense of our children or each other would be a detriment.”

There can be tension at times. “Sometimes one of us may pay too much attention to business after hours,” she says, but for the most part they make it work. The key, Ciccarelli notes, is to maintain a life outside the office. “We give each other the freedom to do what we need to do, and we support each other no matter what.”

70%

The percentage of global GDP contributed by family firms.
— Family Firm Institute

#1

reason why people like working in a family business? They enjoy and love the work.
— KPMG Enterprise

93%

Family-owned businesses that have a family member as CEO.
— KPMG Enterprise

Keep staff motivated – and moving

When family members run the show, the path up the ladder can seem unclear for staff. Make sure you give them a chance to move up.

If there’s one thing Hamilton-based Mabel’s Labels isn’t short of, it’s top-level talent. The popular kids-focused, label-making company is run by four family members – Julie Cole, her sister Cynthia Esp, their sister-in-law Julie Ellis and their aunt Tricia Mumby – who have all been involved in the business since it opened in 2002.

With that many relatives running the show, it’s not unusual for the company’s 45 employees to wonder if there’s any hope of moving up. That’s a common issue in a family business, says Cole. It’s natural for people to believe that family comes first, but if staff thinks that there’s no chance for advancement, then it will be tough to keep them around, she warns.

Combating this issue is critical in creating a long-lasting, relative-run operation, something of which Mabel’s Labels’ owners are mindful. “We don’t want them to think that just because it’s a family business, they won’t be able to advance,” says Cole. Because of the sensitivities around this, the founders make sure to touch base with employees every six months, rather than annually, like most operations.

They ask their staff about their goals and the jobs they’d like to have and then try and make a move happen. One mailroom worker, for instance, expressed an interest in social media – he’s now the company’s social media coordinator.

It may be tough for an outsider to become the boss, but the foursome will always find ways to keep staff moving. “Just because we’re at the top doesn’t mean no one else can weigh in,” says Cole.

Divvy up duties

Just because you grew up doing everything with your sibling, doesn’t mean you need to run every part of your business together too

Jordan Fortino and his older brother Eugenio have been inseparable ever since the two were little kids. They played hockey on the same team, they worked as golf caddies together and they had many of the same friends. That closeness has continued into adulthood, where the brothers – 28 and 32, respectively – now run a budding business together.

As co-owners of Hamilton’s Fortino Umbrella Inc., a company that builds houses and does painting, decorating and window washing, the twosome’s lives are more intertwined then ever. While that is a positive – it’s rewarding to work on something that benefits the family, says Jordan – it can also pose problems.

When the business first started, the Fortinos did everything together, just as they did when they were growing up. They’d often be at the same job site at the same time, and they’d both handle the same duties, such as sales or finance. As the company grew, though, they realized that it was high time they started working apart.

Their togetherness made the company less efficient, says the younger Fortino.
Rather than the brothers tackling different duties simultaneously, they worked on only one task at a time. It also ruined the continuity of a job site. One person would say one thing, and the other would say something else. “There were two strong personalities managing one job site,” Jordan recalls. “That’s not good for flow.”

While it was hard to let go, the two had to think hard about who was going to do what. In the end, they played to their strengths. Jordan’s a better networker, while his brother is better at operations. “I say we can do this and that, and my brother figures out how to deliver on those promises,” says Jordan. They may not be with each other as much as they used to, but they’re still together far more often than most siblings. “There’s nothing better,” he concludes, “than working with a brother.”

25%

Family-run firms exceeded the S&P/ TSX ’s compound annual growth rate by this much between 1998 and 2012.
— University of Toronto

59%

The percentage of family business owners who said that obtaining new customers was a top priority. It was the number one priority for family operations.
— KPMG Enterprise

50%

Half of global family business owners say their governance board is comprised of non-family members.
— KPMG Internationale

Plan for the future

You won’t always be around to lead the way. It’s important to have a succession plan in place so the business doesn’t go bust without you

It’s the age-old family business question: Who’s going to take over after mom or pop passes away? It’s not always easy to answer, especially if more than one child is involved in the business.

David Khazanski, CEO of INKAS Group of Companies, a Toronto-based business security and protection firm, knows he’s going to have tough time choosing a successor. His wife runs the company with him, and he works with two sons, a daughter and a brother.

While all of his kids will become owners one day – “I want them to all enjoy it financially,” he says – it’s not yet clear who will be the one to run it. He does have a succession plan in place, albeit an unorthodox one. When he and his wife can no longer operate the business, a group of relatives who are not involved in the company will step in and decide who should be the boss.

“They’ll come in and be mediators and make sure everyone is happy,” he explains. “They’ll continue the business and figure who’s capable of doing what.” Khazanski also leaves room for the possibility that none of his kids will take over. He wants the best person to run the business. If that’s someone from outside the family, then so be it. “It’s about finding the right person to grow the company,” he says. “I’m hoping the choice will come naturally.”

11%

Family business owners who said that they have a formal CEO succession plan in place.
— KPMG Enterprise

Keep egos out of it

Families are a sensitive bunch, but don’t take anything personally

Relatives are usually good at forgiving and forgetting – otherwise every family event would be mighty awkward – but they can also get easily offended at even the slightest bit of negativity.

That’s why, when Terri-Lynn Woodhouse runs her business meetings with her co-founder father, mother and brother (all employees), they lay down some ground rules. “At the beginning of every meeting we say not to take things personally,” says the co-owner of One Earth, a Thorold, Ont.-based company that sells items made by Moroccan and Peruvian artists.

A family business only works if everyone respects each other and understands that every decision is made for the good of the business, which ultimately benefits the family, she advises. “It’s a business and everyone needs to pay their bills, but there are a lot of personalities. So you have to always set those ground rules and have respect.”

For Darryl Rawlings, CEO of Trupanion, a Vancouver-based pet medical insurance provider, it’s about more than just respect. Family members also have to check their egos at the office door. This is especially important in his case: Rawlings’ father, David, is one of his employees. He joined the company after his bed and breakfast went bust during the recession. “Not many fathers would want to work for their son,” Rawlings says. “But he never let his ego get in the way.”

It’s not always easy to keep those egos in check – families always get on each other’s nerves – but Woodhouse works hard to make sure everyone knows it’s nothing personal. “We have to see each other again,” she says. “So we look for the good in what everyone is doing and appreciate the work we’re all putting in.”

- By Bryan Borzykowski / Illustrations by Graham Roumieu