The Balancing Act

September 9, 2000

By Bill Rauser

“Keep personal personal and business business.” That’s my mantra and what I believe is absolutely fundamental to the success of a family business.

With more than 30 years of management experience under my belt (19 of which include management and day-to-day operations of a growing family business), I firmly believe that there are positives and negatives to such ownership.  But, with careful planning, a commitment to open communications, and the commitment to keep business and personal issues separate, it can work and be highly rewarding.

Rauser Professional Contracting, founded in 1981, is owned and managed by two brothers and a cousin. To clients, this means that a member of the family, who has decision-making ability, is on each job site each day to ensure that the quality of work is the same as we would perform if the home or renovation were for ourselves.

From our perspective, however, balancing the unique demands of owning and operating a family business adds another dimension to management that may be cause for pause if you are thinking about starting a business with family.

There are four primary benefits to a family team effort: trust, satisfaction, closer family ties and comfort. Specifically, when you work with family, there is a greater level of trust, knowing that everyone is pulling for the same cause, albeit the benefit of individual families within the extended family structure.

Additionally, trust is translated on many levels — from leaving a purse or wallet accessible without a lock and key to knowing that your bank paperwork is safe sitting on your desk. Such a level of trust is especially comforting during times when you can’t be there; when you go on vacation, you know with confidence that you have a person with a similar level of commitment and decision-making ability left running the shop.

The second advantage, satisfaction, stems from the knowledge that you are not only working to support your own family and to meet your personal objectives, but that you have contributed to the economic status of family members — the extended family.

A third benefit is the fact that your family is often closer simply because you are together more than if you worked at separate businesses. That closeness naturally breeds greater camaraderie, not only among those directly in the business, but among their spouses and children as well.  Think about it: it is really easy to whip together a family crab feast when three different families are together on a Friday at work. All you have to do is simply coordinate at which house the gathering will be and who’s picking up the crabs.

Another benefit is the depth of caring that translates to comfort. Family usually cares more than non-related employees; additionally, the way the members of the family were raised is often similar, so values and issues may be more easily shared, whether they are business or personal.

For instance, when my brother or cousin tours colleges with their children, it is of more personal interest to me, and I can value what they are facing since I’m not only a father, but I want my nieces and nephews to go to good schools. I know the parties involved and take the time to support their efforts, even if that means more work for me. I know they would and could do the same. That’s comfort.

In terms of the negatives, the biggest issue is the reluctance to criticize or address a person’s performance. Not only can it create hard feelings between owners who are related, but there is undoubtedly spillover into the families — spouses and children. Because of this, there may be a tendency to not address concerns that would be addressed if the parties were not related; or if the issue is addressed, hard feelings can erupt.

Additionally, jealousy and issues over compensation and perks can be a common problem among related owners and their immediate families.

Of course, if either of these potential problems is allowed to fester, and, if these issues are big enough, the overall operation of the business could be impacted to some degree. Or, conversely, if they are addressed and hard feelings are not reconcilable, the business may (in a worst case scenario) fall apart as will the family — the proverbial family feud.

To address these negatives from the beginning, I’d advise families to do everything you normally do if you were not related — from buy-sell agreements, insurance policies and benefit packages, to non-compete papers, stock and a board of directors that meets regularly (even if it is just two partners).

Additionally, consider the merit of assembling an advisory group of individuals whose opinions and track records in business can contribute to your operation. Their neutrality can be invaluable in areas where family members could be seen as adversarial toward each other.

The infusion of fresh ideas and objectivity are well worth the monthly or quarterly dinner or breakfast you may feed these allies who want to help you succeed (and whose egos are stroked because you obviously values their experience and opinions).

The bottom line is this: A family business can be an incredibly rewarding opportunity if treated as just that — a business. To manage your operation less formally or less professionally just because the parties are related would just be bad business.

Be sure the communications are open, and last, but certainly not least, be sure the members of the family are complementary in their strengths (vs. strong in the same areas) to avoid friction and to allow you to benefit of diverse talent. Think twice before you criticize or question why/how your family members are handling their areas of responsibility. That is, remember to trust that each is doing everything possible and beneficial in that area of expertise...whether that’s managing the staff, handling the finances or overseeing the day-to-day client projects.

Bill Rauser is president of Rauser Professional Contracting. He can be reached at 410-833-3883 or br@rauser.com.

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