EntreLeadership - Reacting to Family Business Horror Stories

Starting point is 00:00:00 Hey guys, I really need your help with something. I want you to shape what comes next for the Entree Leadership Show by participating in our 2026 audience study. Text survey to 33789 to get the link or go to ramsysolutions.com slash survey. Once you've completed the survey, you can enter for a chance to win a standard ticket to Entree Leadership Summit 2027. The survey closes September 30th. Hey guys, I really need your help with something.

Starting point is 00:00:42 I want you to shape what comes next for the Entree Leadership Show by participating in our 2026 audience study. Text Survey to 33789 to get the link or go to Ramsey Solutions.com slash survey. Once you've completed the survey, you can enter for a chance to win a standard ticket to Entree Leadership Summit 2027.

Starting point is 00:01:08 Survey closes September 30th. I know firsthand how incredibly rewarding it can be to run a family business. And some of the strongest companies in America are built by families working together. But when family business goes bad, it usually gets really ugly. We've spent decades coaching business owners through this. I've seen siblings stop speaking. parents and kids end up in lawsuits, and companies worth millions implode because no one was willing to have the hard conversations. So today, Entree Leadership's head coach John Falcons is reacting to real family business horror stories to show you how to keep these mistakes from happening in your own business.

Starting point is 00:01:55 If you think your family's dysfunctional, way do you hear these stories. Let's get to it. Well, if you're looking for family business horror stories, look no further than Reddit, because it is full of them, and I've got one here to read for you. It starts, My father is a highly successful businessman. After college, he invited me into the fold asking me to get into the business with him. This was the first time I noticed a fundamental difference between how my father and I conducted business.

Starting point is 00:02:27 My father and I now regularly fight about operations and money. Some conversations become very heated. He inevitably always undermines me, sometimes publicly, resulting in our employees no longer taking me seriously. Additionally, he does not want to compensate me appropriately for the work I'm undertaking. It's simply a giant exhausting power struggle. My father has threatened to kick me out of the fold on more than one occasion. I feel a relationship deteriorating. I fear that there may be a breaking point in the future that we couldn't come back from.

Starting point is 00:03:06 My father has always told me growing up that he hates having business partners. And now I see why. He is an absolute nightmare to work with. Wow. There is a lot in here. First of all, let me just say this. Your relationship with your father is more important than you working in the the business. So if you need to walk away right now to save that relationship, do it. It's not worth it.

Starting point is 00:03:37 Now, if you want to figure it out, I've got some ideas that you should consider, but don't trash your relationship with your dad just so that you can work together. You'll look back and regret that if you do. Secondly, it doesn't really feel to me like your roles are clear, like who's supposed to do what in the business. If it's a power struggle all the time, that's a power struggle all the time. That's probably because you haven't gotten clear about the roles. What's he supposed to do? And what are you supposed to do? That will each give you a lane to run in.

Starting point is 00:04:10 Now, if you do that and he keeps diving into your lane reactively, you need to talk about that. But you need to get ahead of this. You need to stop just reacting to it all the time, and that clarity will do a lot for you. You might have to push him a little bit on exactly what you're allowed to do or what your area of responsibility is. And if you can't get clear on that,

Starting point is 00:04:35 I don't think there's a reason to continue. There isn't a reason to continue the pain. So make sure that you get clear. And then you can't just have authority sometimes and then have it taken away. That's something that you need to talk about separate from when you're actually in the problem. And that probably brings something else up

Starting point is 00:04:55 that we need to address. None of this is really about the big. business. None of this is about your role or his role or who gets to make which decisions. That's what it is on the surface. But what it's about is your dad has built this thing through blood, sweat, and tears. And it probably scares him a whole lot to start to let go of it. So every time you do something, whether the decision is good or not, that probably scares him because he gets these whispers of what it would be like if he wasn't there. And he probably hasn't addressed that. So my advice is you've got to address that first, that underlying issue. Yeah, he needs a successor,

Starting point is 00:05:44 but you've got to be careful about getting a cart before the horse. You've got to resolve the emotional issues that are really driving all of these reactions and all of this behavior that's so counterproductive. There's no easy way of doing that. If he's not ready to do it, he's not going to do it. There is one question that I have seen over the years of coaching a whole lot of people in a whole lot of family businesses that has the best odds of helping him with this. It's not a magic wand. It's not a silver bullet, but it works more often than anything else. And that is to ask your dad the question. Dad, 20 years, 30 years, 50 years from now. what do you want to be true of this business?

Starting point is 00:06:28 And then just sit back and let him talk. What you're doing is you're eliciting a visual image of the business far in the future. And that can take the emotion out of it. That's what you need to do in all of these conversations. Yes, I understand that you're trying to work with him and he does have to hand the business off, a successor. Like I said, but if he's not emotionally ready to do that,

Starting point is 00:06:54 it doesn't matter what you do, it's going to be wrong. So start there, get clear on what he really wants to do, and then tackle these issues one at a time after that. I hope it works out, and I think you can probably do a good job, but you both need to decide what you want to do before you try to execute on how you're going to do it. Okay, let's get on to the next one. Here it is.

Starting point is 00:07:20 I have been working for a family business that my dad started, back in 1995. I've been working here since 2015. I also have two brothers that are working here as well. We have 20 employees and typically gross around $3 million per year. Good job. My issue I'm having is that my two brothers have zero motivation or care when it comes to the business, aka they're duffices.

Starting point is 00:07:50 What I mean is they do absolutely nothing. They, to be unclear is to be unkind. That's pretty clear. They do nothing. They are the last ones to show up and the first ones to leave every day. They sound like a stellar pair. They stay on their phones all day long. My dad stays so busy and involved with the business that he doesn't want to deal with them.

Starting point is 00:08:13 I don't want to deal with them. I've had multiple conversations with him to try and fix this problem, but he refuses to get involved because he's so busy. If something were to happen to my dad and the business was left to me and my brothers, there would be major issues. Newsflash, there's major issues now. I have an opportunity to go to work for another company that has potential for me to make $200,000 or more. But it's hard for me to leave the family business because I am the last chance the business has to survive. Wow. There's a lot here.

Starting point is 00:08:52 And I think you need to have a heart-to-heart conversation with your father. Because you're right, it's only going to get worse in the future. It's bad now. The picture you've painted now is bad. I understand that you want to help the family business live on. That's very noble of you. And as uncomfortable as it's going to be, you have to get your dad to pause just long enough to have a conversation with you.

Starting point is 00:09:20 And you know what? it's okay if in some regard he doesn't want to have to deal with your brothers, but he has to back you to deal with them. You have to get on the same page at a minimum. Something has to be done. So you've got to sit down with your dad, and I wouldn't want you to threaten him that you're going to leave, but you need to be honest with him.

Starting point is 00:09:41 You could say to him, dad, I have an opportunity to go make really good money someplace else, and that has its appeal. But I don't want to do that because you, have poured so much into this. But dad, if we don't do something about this problem, if we don't do something about this problem, the business isn't going to last after you're gone. Me and Tweedle Dumb and Tweedle D are going to blow up after you're gone because it's not working now. It's not going to work then. You have to get him to stop and have that conversation. What you have really is a vacuum of leadership, right? If you lack leadership today, now I'm not saying you necessarily say this to your

Starting point is 00:10:25 dad. I'm saying this is what's going on, right? You have a lack of leadership. He's not stepping up. I don't even think it's because he's too busy. He's avoiding a hard conversation with his sons. That's what's going on, and he's using busyness to hide from it. So you've got to get him to stop. But his unwillingness to lead right now will in fact be the crisis of tomorrow. And you've got to tell him, you've got to step up and lead. It doesn't matter that he's your dad and, you know, he founded the company. I mean, it does matter because you need to be respectful. But at the end of the day, it doesn't matter because you've got to prioritize what's good for the business and what's good for your family too. So you have to lead when your dad isn't willing to do

Starting point is 00:11:11 so. So get him to slow down and have this conversation. Being family doesn't exempt you from being accountable. Your brothers have got to do something to earn a paycheck. Ask your dad, hey, if somebody that wasn't family did what they did, would you want to pay them? I'm pretty sure the answer is no. You don't have to make your first step running them off. You don't have to make the first step just firing them. What you need to do is get on the same page with your dad and then make the first action that you take is accountability and get aligned around what expectations are. Giving family special treatment versus paying them what's fair, those two things create a lot of resentment. You understand? I'm saying just paying them because they're family when it's not fair,

Starting point is 00:12:00 that creates resentment not only for you, but for everybody in the company because you're sanctioning incompetence. You're sanctioning mediocrity. You're telling everybody on the team, it's okay to be a dufous. It's okay to show up late, steal time when you're there. You're and then leave early. Is that the message that you want to communicate to the entire team? I don't think so. You said you built a $3 million a year company. That's not what builds $3 million a year companies. Clear expectations, accountability, having goals and hitting them. That's what builds a successful company, but your dad doesn't want to address the issues with his sons. I know that that's tough, but that is what you've got to get him to do.

Starting point is 00:12:44 Okay, let's get to another one. It reads, I'm the oldest son in our family business. We run a successful construction company that my dad built from nothing 35 years ago. I'm 32 now, and even though I've been working here since I was 18, my dad still micromanages everything. Isn't that fun? Every decision needs his approval.

Starting point is 00:13:08 The worst part is he's starting to forget things and make costly mistakes, but he won't admit it. It's not just about the business anymore. It's destroying our family dinners and holiday gatherings. Honestly, at this point, I might even just step aside and let someone else take over. My dad is an old-school Italian guy and love him and respect everything he's built, but I'm at my breaking point. I get that that's tough. You love your dad, but it's putting you under a lot of strain to be working like this.

Starting point is 00:13:43 Here's the thing about micromanagement. It's fear. driven. It's not a technique that anybody says, you know what, how we are going to win in this business is I'm going to micromanage everybody. No. What's going on is your dad is scared. Your dad is scared that something won't work, that the business will fall apart, that there'll be hard times again. And here's the thing. He's been at this 35 years. He's been through a lot of scary times. I don't even know him. And I know there's been weeks where he's thought, I don't know if I can make payroll. I don't know if I know where the next job is coming. I don't know if we're going to make it. So he's still

Starting point is 00:14:26 white-knuckling the business. He doesn't want to let go because all he's ever known is if I hang on tight, if I keep everything underneath my thumb, we'll survive. And it does work to a certain extent. The problem is your dad will leave the business one day. We don't know how, but he won't be there one day. And if he doesn't teach everybody around him what made the business successful and let them practice the things that made the business successful, it won't stay successful after he's gone. So again, one of my favorite questions to ask somebody in this scenario is, hey, dad, what do you want to be true of the business 20 years from now. And here's the thing that I need to remind you of. Don't ask him this when you're in the middle of a fight. Do this when things are chill.

Starting point is 00:15:21 Take him out to coffee one morning when something's not going on, when there isn't a fire, and just sit down and have a casual, friendly conversation with him. It's probably going to be the first of a whole series of conversations that you have with your dad. You're probably not going to see a lot of movement the very first time that you bring this up. But what we're doing is we're decoupling the emotion with the plan. He needs to think logically and rationally, not emotionally, not fear-driven about what he wants to be true of the business far in the future. That's how you can help him lift his eyes up and look out into the future and start to talk about that. And if he asks why you're asking, just say to him, because I want to make sure we do those

Starting point is 00:16:07 things. I want to make sure, dad, that 20, 30, 50 years from now, this business is still known for what you wanted to be known for. This business is still known as the business that you built and has the values and the characters that you wired into it over all these years of the blood, sweat, and tears that you poured into it. You're honoring your father. You're honoring the effort that it took to build this business. He's going to want to hear that. Not in the heat of battle when you've made a mistake or he thinks you've made a mistake. Don't bring this up then. It won't work.

Starting point is 00:16:43 Here's the truth. If he's still having to do everything after 35 years, he doesn't own a business. He owns a job. And that's not sustainable. He's got to build into the organization, into the people, the values, the decision-making, the behaviors that will carry the business on. And that's what you're trying to get at. Success isn't an event.

Starting point is 00:17:08 It's a process. We'll get right back to our episode, but first, a lot of business owners I talk to have a vision. What they don't have is capacity. You're spending your days buried in hundreds of administrative tasks like email and scheduling and travel arrangements. Those don't require your leadership. You should be spending your time on things only you can do.

Starting point is 00:17:31 That's why I recommend belay. I've gotten to know the Belay team over the years and they understand leadership, growth, and what it takes to help business owners achieve more. Belay helps overloaded leaders carve out capacity by providing executive assistants who helped them delegate detail work. These assistants are highly vetted and based in the U.S. so business owners can spend more time on strategy and leading their teams. When you're not tied up with a bunch of little tasks, what could you do? If you've never thought about it, check out Belay's free. resource called 15 big moves you can make this quarter if you had the capacity. You can download it for free by texting Entree to 55123.

Starting point is 00:18:12 That's ENTRE to 55123. Now let's get back to the episode. Okay, let's get to the next one. I own a company that employs my siblings and seasonal help. As long as the work is accomplished, they can have freedom to do what they want. My brother loves the arrangement. I bet he does. And he has worked with me for four years now, but my sister resents me for it.

Starting point is 00:18:38 She has worked with me for two years. She apparently told my dad the other day that I make her work all hours of the day, which simply is not true. If she takes the morning off, then her work needs to be completed later in the day. That's all. My dad exploded in anger at me the other day when he stopped by. He wanted to know why I was hurting my sister's health. He said it was my job to read between the lines and that my brother is probably overworked too.

Starting point is 00:19:11 I've been told by my parents that I am never allowed to let either my brother or my sister go. That's not going to work out well. Unless they want to leave by their own choice, the arguments and the anger I am getting from my parents is weighing on me. Let me start out by saying this. Your family business will never be healthier than your family. You have got to get clear with the members of your family, what expectations are, and then you have to decide if you want to be a part of that. There's a little bit of crazy running around in this story.

Starting point is 00:19:51 And it's up to you to decide, do I want to be a part of this? because the fact is you probably not going to get your family to act differently than they have for so many years. Maybe you can make things better by getting clear on expectations and getting clear on, you know, whose role is what and when people are working and all those kind of things. And you should. You should give it a shot. But I'm just telling you, your family business will be no healthier than your family is itself. if you set up a system that allows people to be lazy, then laziness is what you're going to get. When you set up a system where your dad can just swoop in and change things, that's what you're going to get.

Starting point is 00:20:36 If you can set up a system where your sister can go run to daddy and complain about you as the leader without dealing with you, what do you expect? You can't let family members float in and out of the business and speak into the decision. that just won't work. So again, get healthy as a family, or at least get as healthy as you can about how the family relates to the business. But if you're losing hope that that can actually happen, then maybe you need to look someplace else to work. Okay, let's dive into the next one.

Starting point is 00:21:12 My father-in-law has owned a local business since 1985. About 10 years ago, my sister-in-law and brother-in-law began working for him at the business, and eventually he made them minority co-owners in the business. Two years ago, he decided he wanted to start working towards retirement and decided to make all of his children minority co-owners in this business. I've paid taxes on profits that our family has never benefited from for several years now, and I've told her, I think her dad used her and her sisters as a tax. shelter for himself. I have yet to see the legal paperwork making her a shareholder either.

Starting point is 00:21:59 Fast forward to today, my father-in-law and mother-in-law are having marital issues and a separation is very possible. My father-in-law starts acting fishy. He starts showing up at the business he's mostly retired from and raiding the safe and asking for financial information. My immediate thought is that he's looking at selling the business or at the very least figuring out how he can hide money in the business or do something else shady to minimize the pain of a divorce. Whether by negligence or by malice, I believe my father-in-law is about to financially screw over his children.

Starting point is 00:22:40 Wow. Well, I can only take this story at face value, just as you have written it. But if it is like you have written it, I'm going to tell you right now, you need to run for the hills. You need to get out of this because it's on fire and it isn't going anyplace good. You're not going to fix this. It seems like your father-in-law is looking for a way to use this business in his divorce. It's just a wreck. You need to ask your wife what she wants to do. Does she want to continue to work there or to pull out

Starting point is 00:23:12 of the business? I've said it before. Your family business will be no healthier than your family. And I'm sorry to say this, what you already know, your family's not healthy. So you need to really get clear with your wife. I'd start there and decide what you want to do as a family, the two of you. And if you've got kids for you and your family, figure out what you want to do first. You know, you might ask yourself a question. Hey, if we knew everything that we know about this business, about some other business, would we buy that other business?

Starting point is 00:23:47 Would we buy into that other business? I suspect that you wouldn't. You'd look at that and you'd say, that's a hot mess. I want no part of it. The same applies for you. So decide what you want for your business. There's a whole lot that needs to happen

Starting point is 00:24:02 in your father-in-law's business to fix it. Systems need to be in place so there's no room to hide anything. You need to get everything in writing. Everything needs to be talked about in the open. You need to get clear on everything. Everybody needs to be on the same page. But again, if I take this story at face value,

Starting point is 00:24:22 I doubt you're going to be able to pull that off. So the first thing I want you to do is decide what you and your wife want to do for your family. Well, after hearing those stories, you might be saying, you know what? Maybe my family business situation isn't so bad after all. The good news is most family business problems are preventable. They just take clear boundaries, define roles, and the willingness to have the hard conversations before they become expensive conversations.

Starting point is 00:24:54 So, if you want to learn more, we've got an article covering the most common family business problems and how to solve them. We'll leave a link for you down in the description. Don't let these stories scare you away from running a family business. Every family has problems, every business has problems. but it comes down to whether you lead through the drama or let the drama lead you. If you enjoyed this episode, be sure to like, share, and subscribe for more great leadership content. I'm your host Dave Ramsey and this is Entree Leadership.

EntreLeadership - Reacting to Family Business Horror Stories

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