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Edition 329 – Emotional Impact

When business owners talk with me about the issues that are troubling them in business, there’s usually a standard list that includes:

  1. Cashflow.
  2. Workflow.
  3. Employees.
  4. Equipment and/or technology.
  5. Production capacity.

These are all legitimate concerns and each has their own complications and variations, depending on the business and how long it’s been in play as a problem.

However, I can honestly say that in my three decades of working in and advising family businesses, none of those are the biggest issue that will impact business performance. In actual fact, there are times when I have observed that laundry list of issues is a by-product of something else that is at play in the business.

The most significant impact in the success or otherwise of a family business is purely and simply, emotion! The emotions that occur inside of a family business can be incredibly constructive….and incredibly destructive.

How emotion plays out in family business is many and varied, including:

  1. Observing two business owners simply not getting on with each other to the point that it was dragging the business down. Profit was evaporating, cashflow was tightening and everyone in the business could feel the tension. As their advisor, I stepped in, addressed the elephant in the room and encouraged them to consider going their own ways. The end result – the year after they split, the profit of the two separate businesses combined was higher than the last year of them being together.
  2. Bumpy marital relations, sometime leading to divorce and other times not, leads to poor decision making at the upper levels of business …..assuming that decisions are actually being made at all. Often, the affected party is almost paralysed in terms of their ability to operate in business as they contemplate not only what is happening in their personal life, but how it will impact their financial life.
  3. When siblings in the same business aren’t getting on, it is often down to the inability of one or both parties to engage in respectful contemplation of the other’s point of view. Over the years, when I’m in the room, I simply call the conflicting parties on what’s not being said and encourage one party to speak up and the other to shut up. There are times when siblings need to stop treating the other as siblings and see each other as a valued member of the management team.

Not only have I observed the impact of emotion in the family businesses that I’ve worked with, I’ve also been inside of it myself. At one stage during the middle of a business disagreement, our own business suffered as we turned ourselves inwards, focussing on our own problems and trying to resolve them, rather than working with our clients to help them with theirs. Once we’d lanced the boil, which was incredibly painful, it immediately re-set our focus on going back to not only what we do best, but what we should have been doing all along – looking after our clients.

As human beings, we can’t escape emotion. After 30 plus years, I’m yet to see anyone that not only believes, but can prove to me, that any form of emotional disruption in their lives has not or will not impact their business. If they do, I’m bold enough to say they’re lying.

This Week’s Tip

“Emotion is completely understated in terms of how it can derail a business
….or scuttle it completely.”