The Seven Deadly Sins of Family Businesses


The greatest challenges to the nation’s 12 million family-owned
enterprises are not purely business-related issues. Instead,
as research shows, certain behaviors and attitudes can undermine
these companies’ viability. Ensure your clients’ success by helping
them identify and not fall victim to these “seven deadly sins.”
  • It’s the same old song. Carrying over inappropriate behaviors, roles and beliefs from the family to the business—for example, allowing family members to have their way without justification, paying them excessive salaries and expecting junior relatives to assume minor roles in the family business.
  • We’re one big, happy family. Not understanding that the traits of a happy family, such as filial deference, often run counter to those of a profitable business, which must be managed in a strictly professional manner.
  • They may be executives, but they’ll always be my children. Refusing advice from, or summarily overturning the decisions of, adult children because of an inability to take them seriously.
  • If you insist on being yourself, you’re not being loyal to the family. Failing to acknowledge family members as individuals—forcing them to work for the family business though their talents and interests lie elsewhere.
  • Father knows best. Creating a culture centered around the business’s founder, who surrounds himself or herself with easily dominated relatives and advisers.
  • If we ignore it, maybe it will go away. Failing to address problems that may emerge with increased intensity and destructive potential—for example, procrastinating on succession planning or allowing family members with deep-seated conflicts to enter the business.
  • Don’t let the sheep stray from the fold. Permitting children to enter the family business before they have other work experience that gives them confidence in their abilities, enables them to resolve critical childhood issues and reduces the likelihood of conflict.
Source: Keep the Family Baggage Out of the Family Business: Avoiding the Seven Deadly Sins That Destroy Family Businesses by Quentin Fleming, Fireside/Simon & Schuster, 2000.

SPONSORED REPORT

How to make the most of a negotiation

Negotiators are made, not born. In this sponsored report, we cover strategies and tactics to help you head into 2017 ready to take on business deals, salary discussions and more.

VIDEO

Will the Affordable Care Act be repealed?

The results of the 2016 presidential election are likely to have a big impact on federal tax policy in the coming years. Eddie Adkins, CPA, a partner in the Washington National Tax Office at Grant Thornton, discusses what parts of the ACA might survive the repeal of most of the law.

COLUMN

Deflecting clients’ requests for defense and indemnity

Client requests for defense and indemnity by the CPA firm are on the rise. Requests for such clauses are unnecessary and unfair, and, in some cases, are unenforceable.