Master the Family Business Dynamic: Proven Strategies for Growth and Harmony

0:07Hello and welcome to another episode of the duct tape marketing podcast. This is John Jantz. My guest today is Mike Moreau. He is a business coach and consultant specializing in middle market companies and nonprofits. Through his proactive strategic excellence process, he has helped organizations become healthy, scalable, and focused on growth. Today, we're going to talk about Mike's new book, The Family Business Manifesto, A Roadmap to Peace in the Family and Prosperity in the Business. It's just been released, and you're going to be able to get it wherever you buy your books. So, Mike, welcome to the show.

0:43Great. Thank you, John. It's a pleasure to be here. So are there a category of differences between a family business and, I don't know, let's call it a regular business? I mean, are there certain things that are inherently different about a family business? There are, actually. And what's really interesting is when we started our research, we actually started researching for this book about four years ago. And through a series of interviews with family business owners, we identified some very clear differences between a normal business and a family business. And, you know, some of them are kind of, oh, yeah, right.

1:20Duh. Yeah, they're definitely different. But the dynamics of a business dramatically change when you have family involved. And so what we found when we did the research was that they experienced the same challenges that a normal business has. Like, how do we grow? How do we be more efficient? How do we be more effective? How do we hire and retain top tier talent? All of those, all those issues are the same. But when you add a family member, you add a relationship dynamic. I mean, literally, John, I just got an email from a client whose husband, it was a husband and wife that working in this company.

2:03And the husband just resigned because he and the wife could work together. I'm either going to resign or we're going to get a divorce, right? That's it. That's it. And it's so interesting. And he was a key member of the leadership team. You know, he carried a lot of the administrative responsibility of the organization. and you know we're sitting here trying to schedule our next meeting and he doesn't want to participate and I'm like okay he declined the meeting and then I get the email saying he's resigned from the leadership team and I'm like oh my gosh what's going on over there so that's an example of the kind of stuff that you encounter when you have the family dynamic you said it well do we work together or do we get a divorce?

2:49You know? So sometimes people in families, the relationship carries into the business and it has an impact and you're, you've got a family business. You, you know exactly what I'm talking about. I do. I don't think I started it as such, you know, a lot of people really do. I mean, my, my daughter essentially runs our company, but you know, it was a surprise to me that she even had any interest. You know, I didn't, I didn't kind of lay awake thinking, you know, my legacy is through, you know, another generation, but I absolutely love having her in the business. Yeah. Well, I own a small printing company that is a specialty printing company, has a very distinct niche.

3:32And we talk a little bit about this in the book. My daughter and son-in-law run that company. I am very much on the peripheral. I help when I need to, but it's their business, so to speak. but yet I'm still actively involved. And so there are certain things you can talk about with family and you don't talk about with family. And what's really funny is when we get together with my daughter and son-in-law, the very first thing my wife says is don't talk business. You know, let's talk about family stuff, not business stuff. And that's the challenge that you run into is everything kind of the whole universe kind of evolves around the business.

4:12And that's one of the challenges that we found in our research is it's hard to turn the business off and deal with the family stuff. So it's really interesting, the dynamics. And there's all kinds of stories in the book about situations that don't go well and situations that do go well. So it's not a doom book. You know, if you've got a family business, you're in trouble. So it's actually should give people confidence that if you can figure out how to navigate some of those dynamics, you can have the peace in the family that we talk about. I wonder how important, and I suppose every relationship's different, but I wonder how important people did.

4:56Sometimes people don't have the healthiest relationships as a family, but yet it's like, no, you're going to work here. And whether you want to or not, maybe in some cases. So I wonder how important it is. Like, like my daughter and I have a great relationship outside, or at least I like to think so outside of the business. And so I feel like we work together well inside the business, but is, do you think that's crucial? I think it is. And, you know, it all comes down to trust and how much we ascribe motive to what people do. And what's really interesting in family, just family dynamics. I tell people this all the time.

5:36If you looked up the term dysfunctional, you could put my family tree, my wife's family tree right there. And you would see dysfunction all the way through on both sides. And so we had to deal with that. You know, both of our parents divorced. Some of our siblings have divorced. And we've seen the dynamics and the impact of that on the kids, on the extended family and things like that. And when you bring in dysfunction that already exists in a family, it gets multiplied in the business. It's almost like it shines a spotlight on it and says, let's blow this up. And it plays out in behavior. You see that.

6:22And so it all comes back to the relationship. I think you said it right. And what are we doing to nurture and develop that relationship? And we try to put some in the book, we try to put some boundaries around that and say, you know, one of the very first keys, we talk about five keys to having a successful family business. Key number one is you check the relationship at the door. Right. When we're at work, it's not father, daughter. It's not father, son or husband, wife. It's who's in charge and who's doing what. Okay. You do your job. I'll do my job. and if I'm the boss, if I'm in charge, then you have to respect me as the boss.

7:07Okay. And, you know, having a daughter, I don't know about your daughter, but my daughter went through this period of time where, you know, dad was just an old guy, didn't know anything. And then all of a sudden she realized, Hey, I'm maybe do know a little bit about some things. And she was more open to some of the conversations we were having. But every once in a while that, that kind of rebellious daughter kicks in. Oh, dad, that won't work here. We can't do that. Well, we, I rarely ever have to play the authority card, but sometimes you have to. Yeah. It's interesting you say that because I mean, I think probably one of the mistakes people make is that they don't do your best practices that you do in any kind of business.

7:48Right. I mean, just like you said, leadership is leadership and, you know, delegation is delegation and reporting and accountability are, you know, parts, right? And actually just say, oh, no, I know them. I trust them. They'll get the work done. But everybody else is held to a report card. So really, that's probably one of the big mistakes, isn't it? Assumptions are one of the biggest challenges that we find is that, well, I just assumed they would come in and work hard for the family business. Good luck with that. And there's some stories in there about, and you know, the thing is, especially when you're a parent and your child comes into the business, you know, we love our kids and there's nothing we wouldn't do for our children.

8:35And, but sometimes when we play parent at work, we let them get away with stuff that other employees would not get away with. That they're seeing, but they're watching. I guarantee you. And we talk about this in the book. The five keys are check the relationship at the door, have clear roles and responsibilities. Third one is treat everyone the same. You can't have them coming in late and leaving early and skipping days work. Everybody else thinks, well, I can do that too. And they lose respect for the family member. And that destroys the culture too. It does. It has a huge impact on the culture.

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10:39But, you know, probably there's some hope that they're going to rise up and learn the business and want to stay. Is there, you know, I think for a lot of leaders actually transitioning out of the leadership, you know, is hard. Is it harder in a family business or are there certain things that you need to do to really make that a smoother transition? Yeah. First of all, it starts with, do they have a desire to do that? Right, right, right. We can't say, boy, it'd be good for you to take this over. And honestly, that's where we've seen the success in the research was those families where the kids saw their future as part of the business, as opposed to feeling like they have to work in the family business.

11:24Now, I grew up in a family business. Okay. My father, we ran a service station in Farmersville, Texas. And so at the age of 12, dad said, get up, you're going to work. I'm envisioning the two pump, you know, station on the corner of a dusty dirt road, right? Yeah. Well, it was a highway, but it was plenty dusty, no doubt. And it was, we had, we were a full service gas station. So we pumped gas, cleaned the windows, checked the oil, aired up the tires. I mean, we did everything and And it was really funny. One of the great lessons I learned from my father was number one, the work ethic. Okay. I got to watch how he worked and he was a brilliant man.

12:06I mean, he could create anything out of, I mean, he was MacGyver before MacGyver existed. I mean, he could come up with ways to do things, create tools, things along those lines. But it was really interesting. I saw one of the key lessons I learned from my dad was how to compete with other folks. There was a Texaco station about three miles up the road from where we were. And this was a time when full service stations were converting to self-service gas. Okay. And it hasn't always been self-service. You know, these generations, they're not used to somebody coming out and pumping their gas. I think there's still a couple of states that do that, though.

12:51Oregon, yeah. I want to say New Jersey, maybe even, that it's actually mandatory. Yeah, I got in trouble in Oregon at the airport because I was pumping my own gas. The guy came out, what are you doing? Putting gas in the car. But what happened was this station up the road decided to go self-service. Okay. My dad said, you know what? We're going to lower our gas price to equal theirs, but we're going to still deliver full service. We got all the gas business and all the mechanic business because of that. See, he figured out a way for us because we didn't make money on gas. Gas is low margin, but where we made money was in putting tires and fixing flats and front end alignments and brake jobs and all that.

13:32And we got all of that because they were buying gas from us. And so it was really an interesting lesson of how can you position yourself and deliver more value so that you can beat the competition? That was one of the lessons I learned. And that's one of the great things about family members coming into the business is there's no better way to learn how a business functions than from somebody who's been doing it their whole life, who are the, as Michael Gerber calls in the e-myth, great technicians. Right. Okay. And so they have an opportunity to come in, but they got to want to do it. Yeah. I mean, there was a HVAC company that I worked with where the dad and mom basically worked in the business.

14:17They had eight technicians. And one of the conversations we were having was about succession. He wanted to retire. And we're like, okay, well, you plan to sell the business? What are you going to do? And he says, well, I want my son to take it over. I said, does your son want to take it over? The son was a baseball coach. He was a baseball coach at a high school, very successful. And they called him one day and says, uh, we want you to stop being a baseball coach and come work for the business. You know, and of course, being a faithful son, great relationship with his father. He fully trusted that his father had his best interests in heart.

14:55This guy knew nothing about the air conditioning business. And so bring, brought him in, put him in charge of the crews. Well, immediately the crews didn't respect him because he didn't know anything. And he was set up to fail from day one. And honestly, his heart was never in it. He never felt like this is what he wanted to do. And so what eventually happened, and it's kind of a tragic story, within about a year after that happening, dad dropped dead of a heart attack. Just fell over dead one day. And so mom called me and says, I don't know what to do. I said, well, is Joe going to stay with the business?

15:37She goes, he hates this business. And so we talked through her options and eventually they made the decision to sell the business. And so even though the father's desire was for the son to take it over and perpetuate and turn it into, and it was a very profitable, very lucrative business. They were doing very well, but the son just didn't have the desire. And so you've got to get their buy-in to going that route. that's the beginning. Because if they have this feeling of, I don't have a choice or I'm made to do this, there's always some hidden dissension in their process. And that plays out into behavior.

16:15You know, one of the things, you know, sadly still in this country, at least, you know, business leadership is male dominated. However, family business is a tremendous opportunity, I think in many cases, or at least a unique opportunity for a woman to really, you know, easily move into a leadership role. Totally agree. Totally agree. And that's one of the plus sides we talk about in the book is that a family business is one of the greatest ways to accumulate and perpetuate wealth in a family, whether it's sons or daughters. Some of the most successful family businesses I've been a part of have women leaders where the women are the CEOs and they have, and this one I was just talking to you about, the wife is the CEO.

17:01Okay. The husband was the COO. And so that creates some unique dynamics when, you know, in the home, the husband is typically recognized as the head of the house, but at work, the wife is the head of the business. And so you've got some natural conflict there, but the perpetuating the business that the kids got to want to do it. And, you know, we share this example in the book for the 15 years of my corporate career, I worked for a family business, very large multi-billion dollar corporation. And it, you know, and everybody goes, there's really a big family business, you know, like seven of the top 20 fortune 500 companies are family businesses.

17:49Yeah, Walmart. Walmart. BMW. I mean, family businesses. Yeah. Yeah. Walmart, some of the richest people in the world are the family of the Walmart kids. Yeah. Okay. And so, but what happened at, it was interstate batteries. And what Norm did, and I thought this was brilliant. His son wanted to be in the business, but he really didn't have that background. Okay. So he wasn't ready to step in and take over. That would have been a disaster if that had happened when he first came into the business. So what Norm did was he asked Scott to work in every department in the business for a period of time.

18:32He actually worked. I was in the IT department and he worked in our group for a while. And then he went to marketing and then he went to accounting. This guy probably had a better knowledge of all the inner workings of the organization, but it was by design. It wasn't accidental. It was to get Scott ready to take over. And he did. And what happened was when Norm stepped out and became chairman and they had a CEO in between that helped grow the company and had done good stuff. But the guy had kind of damaged some relationships with the distributor base. So eventually, Norm felt like he needed to make a change in order to get those relationships back.

19:17So Scott comes in, rebuilds those relationships, and they have the greatest period of success in the history of the company. And Scott did an amazing job for 10 years as the CEO. And just recently, like in the last couple of years, Scott has stepped down and they've got a new CEO that's not a family member. But it's really interesting when I went to work for them, the first day I was there, everybody in the office asked me, who are you related to? I'm not related to anybody. Well, how'd you get the job? Like everybody in the company was related to somebody. And so, but it's a great example of how that succession worked out and it's being intentional about it.

19:59Well, Mike, I appreciate you stopping by the Duct Tape Marketing Podcast. Where can people find out more about your work and the Family Business Manifesto? Well, it's available on Amazon, and I'll be happy to send you the link to that. And right now, we've got the Kindle version is available for like 99 cents. So this is a good time to get a copy. The other thing is we're starting a new coaching program, and it's called Family CEOs. and they could go to familyceos.com and find out about what we're doing there. And there's also a link there to the book. And that's where they can get in touch with me if they have some questions or want to talk about their business.

20:40Awesome. Well, again, I appreciate you taking a few moments to stop by. Hopefully we'll run into you soon one of these days out there on the road, Mike. You bet, John. It's a pleasure, man.

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