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Requiem For A Family Business

By Chuck Violand

August 14, 2017

The email I received was short and to the point, just like all the other emails I had received from him over the years. “Wanted to let you know that, effective today, we are shutting down the business and will be liquidating the assets.” This news hit me like a ton of bricks. What a tragedy. This was a sixteen-year-old company that was shutting its doors. At one time, it employed over 30 people. Six of them were family members.

Most of the people got along just fine and worked well together. The family members didn’t. It was a constant struggle to get a couple of them to sit in the same room together, much less communicate with each other. Slammed doors, elevated voices, or ice-cold silence was more the norm. With the business closing, that will no longer be an issue.

The patriarch of the family had invested heavily in the business—both financially and emotionally—in an effort to provide for his children and their families. It was also supposed to be a way to bring them closer together, which is frequently the case with family businesses. Unfortunately, I’m not sure that was ever understood or appreciated by the other members of the family.

According to the U.S. Census Bureau nearly 90% of all U.S. businesses are family owned or are controlled by a family, so the tragedy of this family business closing is not unique. In fact, according to JSA Advising, 85% of business transitions fail due to a lack of communication, trust, or next-generation competency.

That was the great tragedy of this company’s closing. It didn’t fail because of a lack of business. Having been in business and performing good work for several years they had a loyal and profitable customer base. They had a healthy backlog of work to be done. The challenges that led to their decline weren’t external; they were internal, just as they are with almost all businesses, large or small. As mentioned above, the culprits in this situation were a lack of communication and a breakdown in trust.

Perhaps the difference is that, in non-family businesses or in healthy family businesses, the company leaders are better prepared to address sensitive internal issues head-on, just as they should be. Frequently, this is because people in these organizations have well-defined job descriptions. They know what their job responsibilities are, what their authority is, and they’ve learned to separate their title and their job performance from their last name.

It’s always tragic when a business fails. For me, the tragedy is amplified when it’s a family-owned business. It’s magnified even more when it fails for reasons that are within the control of the family members, especially since they’re not the only ones affected. The full extent of the victims includes other employees, suppliers, customers, and family members not in the business.

There never seems to be a shortage of blame and finger pointing that goes around when a company’s assets are being liquidated. But these aren’t just assets; they’re memories that are being liquidated. I’m convinced a lot of unnecessary suffering could be avoided if there was a little less ego and a lot more responsibility being taken ahead of it.