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Think family business is a dumb idea? Think again

Edward P. Monte

When asked if it’s a good idea to work with your spouse, parents or siblings, most people react with the same level of horrified condescension. They act as though you had asked if it was a good idea to go to school to become a shepherd or if taking all your life savings and inviting the neighbors over to set it on fire for an evening of s’mores was a good financial plan. Frankly, you will be told running a family business is a stupid idea and anyone with an ounce of sense would avoid it at all cost.

If you persist in the conversation, you can throw out great stats such as upwards of 70 percent or more of U.S. businesses are family-owned and that they account for around 60 percent of the gross domestic product. That will be met with the counter that only 30 percent of family businesses survive to the next generation and regardless of how many family businesses there are, it’s still a stupid idea. Financially, it is a tale of rags to riches to rags in three generations. Besides, who in their right mind would want to work with their idiot younger brother or manically controlling mother, much less test whether working together would strengthen a marriage or simply suck the joy out of your blissful union?

Perhaps most people are correct. Being in a family business may just be a stupid idea. Or, better put, not the easiest idea if you stop to think about it. Luckily, most people don’t stop to think about it and jump in with all the naiveté, passion and recklessness it takes to launch an amazing adventure. After the fact, a million things emerge that demand detailed consideration for each family member; otherwise, the journey of three generations (hopefully many more) will be reduced to a disastrous and painful few years.

A recent addition to the University of New Mexico’s Anderson School of Management, Parker Center for Family Business, was founded almost 15 years ago to help families know what questions to ask and to guide them through the complexities of possible answers. Started as the New Mexico Family Business Alliance in 2005, it has developed into a center for entrepreneurial families to work hand in hand with experts knowledgeable in the unique workings of family business and to meet and grow with other families pursuing similar dreams. Through a yearly symposium and local and regional dinners, led by nationally and internationally recognized speakers in the field, families experience the invaluable benefit of learning from others to avoid reinventing the wheel and falling into predictable black holes.

This year’s theme at Parker Center is navigating the issues of legacy and tradition in any family business with the dynamic innovations and strategies that are the lifeblood of any successful business. Through the establishment of the Next Generation Leadership Group and plans to start an upper generation Stewardship Group, each generation is learning what is most essential for them personally and professionally and for the continued health of their business. If there is any hope for a family to break through the three generations curse, it is to address what is most important for each generation and to weave that into a unified vision.

Perhaps the most important question answered by the work of Parker Center is: Do you truly have a family business, or is it Dad or Mom’s business and the kids just get to work there? This question is followed by a few more. Are you building a cooperative alliance of adults working toward a common purpose? Are you honoring each individual while keeping an unflinching eye on the dual goals of having a prosperous business that will also survive a mutually beneficial succession plan?

Working in a family business may be a stupid idea. What those involved with Parker Center understand is that it is also a heroic, noble and, quite frankly, incredibly loving idea. Starting a family business, or continuing the legacy of a long-established one, is to honor the connection, trust and broader mission of one’s family. No one ever said relationships are easy or even rational. But, as humans, we thrive only within them.

Edward P. Monte, Ph.D., is the founding principal of Family Solutions Group, a family business/family office consulting firm recently relocated from Philadelphia to Santa Fe. He has been a faculty member in the Next Generation Leadership Program in the Family Business of the Quinlan School of Business Loyola Chicago for almost two decades. He is a member of Parker Center for Family Business board of directors.