If you’re a family business leader, there’s a good chance this statistic will resonate with you: only about one third of family businesses successfully make the transition to the second generation and when it comes to third generation family business owners, the challenge is even greater.
That’s because the very thing that’s wonderful about being part of a family business—working with a close-knit group of the people you care about most—is also what can lead to wounded egos, generational conflict, and arguments over the future of the company. The long-term success of a family business largely depends on its leaders’ ability to navigate these challenges.
As the third-generation president of Jelmar, manufacturer of the popular CLR® and Tarn-X® cleaning product lines, I know my company has beaten the odds. But that doesn’t mean we haven’t experienced our share of conflict. In fact, as we expanded from a single product to a nationally recognized brand with multiple product lines, it became more important than ever to make sure we anticipated problems and followed agreed-upon strategies to help resolve them when they occurred.
Here are some key tactics to help you avoid some of the pitfalls—and enjoy more of the benefits—of running a family business:
1. Set ground rules for blending business and personal relationships. Take it from me, working with family can be tough—so tough that my dad actually fired me on more than one occasion during the time I worked for him. Fortunately, he always rehired me, but those impulse firings—and the extremely emotional arguments that led to them—are a good example of the way that family relationships can easily seep into what should be rational business interactions.
That said, I’d never recommend totally compartmentalizing work and family. My family has always talked about business at the dinner table, and calling my dad anything other than “Dad” at work would have seemed strange. But it’s important to set ground rules. For example, parents who might be accustomed to doling out advice to their children in their personal lives may need to learn how to treat them as adult professionals in the workplace. Likewise, children may have to put up with the fact that they need to earn their parents’ respect over time, as I did. The key is talking about these issues before they turn into screaming matches.
2. Keep a balance between tradition and change. I suspect that one of the biggest reasons family businesses often don’t make a successful transition is that older and younger family members can’t agree on the path forward. For example, soon after my dad stepped back from the business and I took the lead, I decided to make some changes. I wanted to create environmentally friendly reformulations of our products, as well as rebrand the CLR® line to help connect with a new generation of customers—ideas that seemed unnecessary to my dad.
Since then, I’ve led the execution of both these projects, taking great care not to lose sight of what consumers already liked about our brand. Relying on focus groups, customer feedback, social media, and other key information sources, we discovered valuable insights that informed our decisions. Ultimately, we found success in creating green reformulations of the existing products consumers already loved (rather than a separate green line), as well as a subtler rebranding than we’d initially planned. We successfully modernized our products, but in a way that even a traditionalist like my dad could approve of.
3. Give younger generations the opportunity to prove themselves. When I started at Jelmar more than two decades ago at the age of 26, I hadn’t decided for sure what I wanted to do with my life—so working for my dad seemed like a logical next step. On my first day, he hadn’t given me a desk or a job title, and it became clear that I had to earn those things by proving my value. Harsh? Yes, a little. Effective? Yes, a lot. It motivated me to work harder than I’d ever worked before to meet the challenge—and to see the job as not just a job, but the beginning of my career.
From what I’ve heard, my experience was quite different from some other young people who go to work for their parents. They may automatically receive impressive job titles, substantial salaries, and preferential treatment from the moment they enter the family business. But I benefited from the fact that my dad made sure my job resembled the real world, with no special perks. I’d recommend that any family business leader encourage younger generations to work just as hard as non-family employees—and just as hard as any non-family employer would require. You’ll be doing a service to both your business and your younger family members.
While these tips address just a few of the many unique challenges family businesses may face, they represent a core consideration for any family business leader: how to preserve what’s special about a family business while driving growth and success over time. In my experience, constant, open communication with your family is the best way to ensure that everyone’s needs and concerns are being addressed—before they become larger problems.
About Alison Gutterman and Jelmar
Alison Gutterman is the President and CEO of Jelmar, the unique, family-owned cleaning products manufacturer of CLR® and Tarn-X® products. Jelmar has been making cleaning easy since 1949, and also environmentally friendly as a 2015 and 2016 Environmental Protection Agency “Safer Choice Partner of the Year.”