The burdens of ownership - owning one's own business

Nation's Business, March, 1994 by Craig E. Aronoff, John L. Ward

Virtually every owner of a successful family business at one time or another asks, "Is this worth it?" Some ponder that question daily. Despite the benefits of business success, the challenges of melding family and business can be daunting. The burdens are real.

While the public perceives the advantages and privileges of ownership, we think it's helpful and important for those in--and out of--family businesses to also appreciate the weight of responsibility and the demons of doubt borne by so many family-business leaders.

While others think that business owners are rich, the owners themselves rarely feel that way. They often feel financially insecure. They are at risk, their personal assets backing bank loans to the business. Taxes seem onerous and unfair. While an owner is trying to make sure there is enough money to support business goals, the family often pressures for money to meet its ever-rising expectations.

The competition between business and family not only for money but also for time, attention, and emotional energy is a source of many burdens. As one family-business leader put it, "wearing two or three hats all the time will give you a real headache."

We often hear family-business leaders say, "If I didn't care so much!" Indeed, perhaps the most prevalent burdens are the stress and the time demands associated with caring deeply and intensely. Consider the following dilemma of a family-business successor:

"I feel like I'm working at least a job and a half. In addition to doing everything I'm supposed to do as an employee, I have to work even harder because, as an owner, I care so much about the company. I feel guilty if I don't fix everything that I see is wrong. If I don't attend to something, I worry that employees will think I don't care; then they won't care!"

Family members not active in the business rarely fully appreciate these burdens. It's our view that, in most instances, family members outside the business underestimate the emotional load carried by those family members who are in the business.

We're not just talking workload. Successors in the business worry about whether they are satisfactorily protecting the interests of all the family members. They feel stress from the realization that their mistakes not only are expensive but also may risk their family's legacy and reputation.

Many owners also feel a deep responsibility to employees. They agonize over employee selection, development, and well-being. Many see employees as members of an extended family and act accordingly. Any layoffs that become necessary are done in pain after a period of real anguish.

Business owners also have to deal with community expectations. Many charitable requests come in, for example, and may have to be turned down at the risk of offending friends.

High visibility is also a burden. We've known families that have changed their family name or then' company name or location in hopes of obtaining some privacy and anonymity.

Being a family business also raises some issues of possible conflicts of interest. Should a business owner curb his or her entrepreneurial instincts and not invest personally in suppliers or customers if the opportunity arises? If there are other family shareholders, perhaps so. Often it is necessary to ignore personal opportunities and the chance to increase personal wealth and income for the sake of the business and as a precedent for future generations.

Business ownership can also prompt tensions with spouses. Practical advice may urge a prenuptial agreement to protect the business, but often with pain to the newlyweds.

Spouses must also live in the light of public expectations. "I'm expected to be perfect ... always 'on,'" one wife complained. "I have to represent the family at lots of events. I have to deflect those who are looking for gossip about the business, and I feel awkward when I walk into the business; all eyes are on me."

Why would a family put up with these burdens? We hear several answers-- some good, some not:

* "I'm expected to Join the business and to carry on ownership. If I didn't, I'd feel like I'm rebuking my parents' wishes for me." Such thinking is very negative.

* "Passing on the business is sure better than the alternatives. I'd be afraid our kids might be spoiled by wealth if we sold." This reasoning misses the point: Someday all children of successful business owners will have some privileges. The sooner they learn to cope with wealth and position, the better.

* Many families wish to carry their businesses on for the challenge of it. They argue that the challenge will strengthen the family, and that succeeding against tough odds is rewarding and fun. We think so, too.

* Some families want to share the business as an example or model of how to help society. This is, we think, the most compelling and sustainable reason. Families that do this share with their children a sense of motivation and mission, of being something important and greater than any one individual.

So, with family-business ownership come a number of burdens. We hope that those family members who are not employees appreciate the extra load carried by family members in the business.