LEADERSHIP

The Many Hats of a Family Business

Tom Garrity

May 26, 2023

This article is the second in the “20-Year Look Back” series by Tom Garrity, founder and managing partner of Compass Point Consulting, as he shares insights and reflections on two decades of supporting family business owners. If you missed the first post, you can find it here.

A family business owner must wear a variety of hats and it can be a challenge knowing which hat to wear and when to keep the business and the family strong.

Product. Team. Customers. Processes. Sales. Revenue. Profit. Cash.

These are the elements to any good, viable business.

A real epiphany for me after 20 years of working with dozens of businesses with amazing products and services is that good and viable is not “good enough” for a family business. While ALL those elements must be present and well-managed, there are actually other dynamics at play to build a sustainable family business.

In addition to a good and viable business model, you EQUALLY need a family unit and ownership circle that work well together, are aligned, and communicate well with each other and the business.

This synergy and alignment take energy, planning, and awareness on the part of a business leader. So why can it be such a barrier to true success and legacy creation for family businesses?

Simple. It’s a matter of hats.
Let me explain.

A family business owner must wear a variety of hats:

• The Business Hats might be that of CEO, President, perhaps even Founder, HR Lead, Culture Builder, Innovator, Motivator, Counselor, and Mentor.
• Then there is the Ownership Hat. Most family businesses start out with one person wearing this hat, then as they succeed to future generations, more owners enter the picture wearing this hat and the conversations get muddled.
• Last but definitely not least, are the Family Hats ranging from Father/Mother, Son/Daughter, Husband/Wife, Uncle/Aunt, Sibling, Cousin… where the family bonds can either knit a tight collective weave or fray under the strain of Life and business.

The challenge is in understanding which hat to wear, when to wear it, and when to switch.

These “hats” are a euphemism for the many distinct groups created with the overlaps of the 3-Circle Family Business Model, with the three circles being Family, Business, and Ownership.

A totally different dynamic arises in the business when you ARE a family member in a family business system, as the boundaries between family, ownership, and business become blurred. What might be the ‘right’ or ‘easy’ business decision or ownership decision may feel like a betrayal to the family. Enter fear and dysfunction in the form of conflict, relationship rifts, addictions, etc…

The key to success is treating each domain as crucial to the entire system, and that each domain needs its own governance and structure in order to be the ‘best’ domain it can be for the health of the entire system.

If the system wins, everyone wins. If one domain of the system is broken or dysfunctional, it can – and will – destroy the entire system.

Choose your hat wisely and wear it well.

Need help working through the many family business hats you are required to wear?
Reach out and set up a call to talk through your highest priority or most pressing challenge right now.

No sales, just a free exchange of ideas.

Or mark your calendar for my upcoming “office hours” session on June 22 or July 27 to lean in and learn how to navigate the challenges inherent in a family-owned business. Click here to learn more…