How Business Coaches Can Help Family-Owned Businesses Survive and Thrive

By Marie Taylor, Steve Crabb

Business coaches can be an asset for family-owned businesses. In the U.S., family-run businesses account for 30 percent of companies, with sales over $1 billion. In the UK, they account for 66 percent of all small to medium-size enterprises. The economic footprint left behind by family-run businesses is a large size 12.

This unique and active sector has specific traits and characteristics that can be both strengths and weaknesses. A needs analysis highlights these strengths and weaknesses and points to where coaching would best benefit the business.

Knowing where business coaching support is most helpful

Here are a few areas in which you can make a big difference with coaching when working with family-run businesses:

  • Bringing in talent: To keep up with competitors and to grow, businesses need to bring in new talent from outside the family. They need to know where to find that talent and how to integrate it.
  • Scaling up the business: Old, traditional ways of working may need to evolve or be redesigned. What worked in infancy may not work as the business matures.
  • Making funding decisions: The family-run business is concerned with how to separate family money from the business and how to raise and use funds.
  • Changing aspirations of the family members: As needs change, personal aspirations may be in conflict with traditional family and business values.
  • Implementing new technological changes: Organizations that embrace change and adopt new ways of working can be more successful, gaining a competitive advantage over those that aren’t willing to move forward.
  • Organizational structure: The unique and often volatile mix of personal family dynamics, business strategy, business values, and ownership structure can create an emotionally charged environment that makes decision making and future planning (not to mention the day-to-day management) of a business challenging.

Also important are succession planning and prioritizing professionalism over emotion.

Evolving the legacy

The LEGO Group is a globally recognized brand that began making wooden toys in the 1930s. Today, it employs more than 10,000 people and sells its modern plastic bricks in 130 countries. It remains firmly in the hands of the founding Kirk Kristiansen family, with Kjeld Kirk Kristiansen and his son Thomas sitting on the company’s board.

In the early 2000s, the family brought in professional management, a move that paid off handsomely with sales almost doubling annually since 2008. This evolution hasn’t come at a cost for the founding family’s values, particularly when it comes to quality, the community, and the environment. “Only the best is good enough” is the LEGO Group’s motto.

Bringing in professional management, and looking at people and processes and new routes to market transformed LEGO in a few years. Such transformation requires flexibility and a willingness to evolve. This statement is never truer than with a family-run business, many of which are steeped in traditional ways of doing things often handed down through generations. For family-run businesses to evolve, thrive, and grow in a global competitive arena, they have to adopt even more professional approaches.

Sometimes someone outgrows the business, and sometimes the business outgrows the person. The modern nature of business with today’s high-tech needs and the life-cycle issues for products and services may no longer suit older generations, just as traditional ways of operating may no longer suit the attitudes and aspirations of the younger generation. Either way, evolution rests on carefully managed succession, ensuring leadership and management continuity throughout an organization.

A robust succession plan ensures that replacements have been prepared to fill key vacancies and that individuals have the ability to assume greater and expanded management responsibilities in the business. It also helps to identify when home-grown talent isn’t there and when and how to recruit the right people for the right roles.

Transition coaching can be valuable when an organization is working to evolve. Moving on can seem traumatic, but with support, an individual can see that staying in a role where he’s not happy or flourishing is of disservice to him and to the business.

Keeping business coaching professional

Conflicts are part of a normal experience for any business. Constructive conflict is healthy because it demonstrates a willingness for individuals to speak their minds and for all to be willing to listen to constructive feedback, even if it doesn’t agree with their views. A business requires a healthy organizational culture to encourage constructive conflict and deal with it professionally.

Many business meetings end with people nodding their heads in agreement to the proposals made and then walking off knowing that nothing will change simply because people weren’t willing to speak up for fear of conflict. But create the right culture to encourage people to resolve any concerns, issues, or disagreements, and you get people onboard.

On the other hand, destructive conflict (when people make conflict personal or take it personally) can have a negative effect on the well-being of staff and the organization as a whole. A business requires a formal management structure that encompasses policies and procedures to deal with destructive conflict. Many family-run businesses begin with informal management styles that don’t have the structure to deal with destructive conflict.

Enter the coach or mentor. With your support, the organization can come to encourage constructive conflict and deal with destructive conflict before it becomes a problem.

When you coach family-run businesses, always coach them to

  • Award roles on merit, not blood lines. The ethos is, “It’s not personal, its professional.” Put family members on the payroll only if they’re making a real contribution. This rule also goes for suppliers. Establish positions, roles, remuneration, and reviews as with a nonfamily member.
  • Be equitable. Be careful not to show family members preferential treatment. Doing so creates the culture of family versus nonfamily, which is a recipe for conflict. Treat family and nonfamily the same when it comes to rewards and discipline.
  • Be honest. Secret meetings with family members to discuss key issues over dinner creates a divide and doubt for nonfamily members who ought to be privy to such discussions. Aim for open, honest communication.
  • Separate family decisions from business decisions. Asking the question, “What would you do if this person were not a family member?” helps keep the decision-making process professional.
  • Have a healthy work–life balance that separates personal from professional. Create working rules where shop talk is off limits. You’ll help family members distinguish between the two.