Family Business

Talking business with family?

What you should know before starting that conversation

There are countless thriving family-run businesses in Canada today, with family enterprises accounting for 63.1 percent of private sector firms. While running a business with family can be hugely rewarding, it’s definitely not easy. Like all businesses, you need to carefully weigh every new opportunity and work through every business challenge—and you must do this while also balancing delicate family dynamics.

There’s a lot to be said for earning an income with your loved ones by your side, but diplomatically communicating business matters with family members—people you’ve likely known since birth—can be difficult. At times, it may seem like silence is the best policy to minimize family fights, but often failure to communicate issues can actually lead to greater problems down the road. To optimize your business’s growth potential, it’s important to understand the impact of poor communication and take steps to nip it in the bud.

Adopting a formal communication process

An important first step towards better communication involves implementing formal methods for how, when and with whom business matters are communicated. This move is not only good for business, but family relationships as well.

Without formal communications processes in place, it becomes easier for certain parties to be left out—either intentionally or unintentionally—leading to “factions”.  Before you know it, owners are operating as individual adversaries rather than one cohesive whole.

Poor communication also makes it difficult to address critical business matters. For instance, if owners can’t see eye-to-eye, it may be impossible to agree on the future direction of the business. Similarly, if one generation of owners is risk-averse and another is willing to invest the family nest egg to pursue the business’s untapped growth potential, a failure to communicate these differences can hamper growth and put strain on personal relationships.

Getting started with strong solutions

So what are some examples of helpful formalized communications structures? Well, a communication forum is a good place to start. Even if you only have two family members working together, an effectively-structured communication forum can set the stage for future success.

Regardless of the stage of your business, putting a communication forum in place can give people an opportunity to air issues as they arise. For some businesses, this could be relatively simple—like holding regular family meetings. Depending on the size of your business, you may choose to bring the entire family together or limit meetings to family members over a certain age—or even blood relatives without in-laws. As your business grows, you may want to introduce a board of directors or an advisory board. Additionally, appointing an impartial individual to facilitate family meetings to ensure everyone’s voice is heard would be considered best practice.

In deciding which path is right for you, it can also be helpful to recruit the assistance of a professional family enterprise advisor. These specialists can help you implement appropriate communication structures and develop rules to enforce them. They can also play a role in the meeting room to make sure processes are followed and that concerns are aired in a professional way.

Communication can be simple but it’s not always easy

Taking a proactive approach to family business communication can help you do more than address challenges in a diplomatic and open way. It can also give you a chance to regularly clear the air of any issues among family members that can affect the smooth running of day-to-day business as well as your ability to make bigger decisions.

To learn more about how you can improve your family’s business communication processes, contact a Grant Thornton Family Enterprise Advisor.

[1] Family Enterprise Xchange, September 10, 2019. “Family Businesses Generate Almost Half of Canada’s Private Sector GDP and 7 Million Jobs According to New Conference Board of Canada and Family Enterprise Xchange Report.” https://www.newswire.ca/news-releases/family-businesses-generate-almost-half-of-canada-s-private-sector-gdp-and-7-million-jobs-according-to-new-conference-board-of-canada-and-family-enterprise-xchange-report-858070827.html

[2] John A. Davis. “The Three-Circle Model celebrated 40 years in 2018.” https://johndavis.com/three-circle-model-family-business-system/ (accessed March 10, 2020).