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Families Bleed Businesses and Threaten Growth & Survival

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Families Bleed Businesses and Threaten Growth & Survival

It is a regular practice in most parts of Africa and other parts of the world for entrepreneurs to rely on or resort to family for assistance (technical, financial, legal, political or any other form) at the beginning of their businesses or in later developments of the business. Is this relationship between family and the business of an entrepreneur beneficial to the growth of the business?

A study of some selected small scale businesses revealed how this relationship between family and business affects growth and survival of the business.

First of all, I realized that the interference or involvement of family in a business start up is a controllable factor which is solely a decision of the business owner. It is not an unavoidable relationship in every business start up. Some entrepreneurs have however stated how they are unable to break that interdependence between family and business, and are therefore left with only an option of prudently managing that relationship to their mutual benefits.

Practices by the family that kills the business

  1. Drawings

Business owners were quick to point to the fact that it is a regular phenomenon for family members to walk into their shops and pick items and walk away. Wives, children, siblings and sometimes friends walk into the shops or offices and pick items, usually consumables, leaving the business owner with just a word or two or to be generous, very short sentences like “I’ll be back soon”, “see you later”, etc. I’m sure you’re wondering how business owners allow that to happen. It is usually because these family members have at some point given the entrepreneur some free service or favour and have built that sense of entitlement or claim to the goods in the shop. This menace occurs often with businesses dealing in tangible goods, especially edibles (food and drinks).

  1. Unpaid bills and bad debts

Perhaps, the most menacing practice by the family that kills businesses quickly is deliberate refusal to pay bills. Sales made by the business owner to members of his family or friends on credit, remains unpaid, or even if its paid, only a portion of the bills is settled and mostly after a long period of time. Small scale business entrepreneurs (over 90%) admitted to having experienced such a practice in their businesses and solely attributed the resulting bad debts to familiarity. Accumulation of these irrecoverable family debts eventually run the business into debts and it is soon forced to close shop.

  1. Disregard for structures and controls

Entrepreneurs usually look to their families to employ cheap labour. This convenience can be very helpful to the business if it works out well. However, not all family members are willing to work very hard to help the family entrepreneur to grow his business and realize his dreams. Definitely not all. Small scale enterprises usually do not have clear and strong structures that check behaviour and ensure compliance and conformity. It is a rampant practice to see family members lingering around and literally doing nothing. They disregard all business protocols and work ethics. They come in late and leave early. They speak rudely to other employees and superiors who are not members of the family of the business owner. They are not only unproductive employees but by their deeds lower the overall productivity of other employees.

  1. Reliance on business for financial support

Family members sometimes look up to this one entrepreneur to foot almost all bills incurred by the family. Some of the business owners I spoke with admitted to how difficult it is for them to ignore their families and not pay the bills. They viewed it as disrespectful and would rather choose to do what is honourable – even if it means paying it out of business coffers.

There are numerous businesses that are now defunct as a result of family interference or involvement. The owners of these defunct businesses were quick to lay the blame at the door of the family members. Business owners and entrepreneurs must learn to separate the business from the affairs of their families as much as possible, and importantly, to the point that the family does not feed on the business to the point of threatening survival and growth. Good news is, it is absolutely possible to do so.

  1. Brand Erosion

Family members can do a lot more harm to your business than just siphoning cash from the business. Their conducts, utterances and behaviour are strongly attached to the product or service provided by the entrepreneur. Human beings associate behaviours of people closely related to a brand or product to the product itself – consciously or unconsciously. Some entrepreneurs have suffered from the public behaviours and utterances of close family relations by way of dwindling sales. A fashion designer and clothing retailer admitted having lost some customers and sales due to poorly or shabbily dressed family members in public areas.

It is not conclusive that the family has an absolute negative influence on small scale businesses. There were positive influences identified in the study which are presented in another article (Family and Business: 5 ways family impacts your business positively). Whether or not you reap benefits or experience the dangers of the relationship between family and business is one that is entirely within the control of the entrepreneur.

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