All in the Family

How to keep a family-owned business thriving from one generation to the next

Ultimately, the two reconciled, and Michael returned to the business and purchased it wholly from his father in 1991. Today, it’s an immediate-family affair that sometimes includes his older son, Michael G. Jones II, helping out as a funeral attendant. With his younger son, Marcus, uninterested in working for the business, Nina is his only child with significant involvement. “I’m not going to say it’s perfect—we do fuss and fight,” Michael notes. “But in the end we work it out.” The Joneses, along with four full-time nonfamily employees, manage a thriving small business. But other companies aren’t as lucky.

The main reasons family-owned small businesses fail are simple:

• They don’t plan for the future. “Issues that arise are often avoided until it’s too late,” says Dennis Jaffe, Ph.D., a family business adviser who is also professor of organizational systems and psychology at Saybrook University in San Francisco.

Family considerations overrule business considerations. “They do things for family reasons and based on family traditions rather than on business reasons. Those two issues show up over and over again,” says Jaffe, who is also the author of Stewardship in Your Family Enterprise: Developing Responsible Family Leadership Across Generations (Pioneer Imprints; $19).

One way to counter the first of these two problem areas is to prepare the next generation—the potential successors—for the future. Jaffe recommends starting the moment they begin working in the business, if not sooner. But going from dinner talks to talking business can be a tricky transition. Michael agrees. “Trying to listen to Nina as an adult, as an employee, and not as the child I’ve raised—that’s always a hard transition,” he admits. “And I had the same experience with my father. We had bumpy roads.”

Having a parent as a boss is not the same thing as having a third party as a boss, asserts Neil Raphel, founding partner of the full-service St. Johnsbury, Vermont-based Raphel Marketing, as well as co-author of several business books, including Business Success in Tough Times (Raphel Publishing; $17.95) and The Complete Idiot’s Guide to a Successful Family Business (Alpha; $18.95). Raphel says those involved in a family-operated venture must “act like it’s a business.”

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