1. It Only Sounds Good at the Beginning
Typically, when family members are hired, they work hard when they start but donít tend to maintain that pace over the course of their employment. While this sounds cynical, itís truly a reality of family business dynamics.
These people know they canít get fired, and therefore do not get tasks done at the pace thatís required for a successful business. And since their ability to do basic tasks is subpar at best, their ability to launch new initiatives and innovate are non-existent. To be successful, your employees must manage their time effectively, stay focused on your goals, and go above and beyond the call of duty on a regular basis.
While these men and women are hard to find, they are out thereóyou just need to search for them. Whatís the probability that these people are your brothers, sisters, cousins, or parents? You certainly limit your choices for talent if you restrict key personnel to the people in your family. Thatís why itís not a good idea to go into business with your friends, family and people you know simply because thereís a family or family-like relationship in place.
Your best, key employees and business partners will be those with relevant business experience. They donít even need to be your friends outside of work. One of the things Iíve observed in business is that the team you start with is often not the team you end up with down the roadópeople will come and go. Restricting your ability to change these relationships over time and replace them with the people you need to get to the next level is the main reason why hiring family only sounds good at the beginning. Eventually, everyone stops trying.2. The Belief that You Must Hire Family is Always False
Most of the time, when you find a bar operator whoís trapped with family coworkers, itís a self-inflicted problem. Everybody has immediate and extended family membersójust because you own a bar doesnít mean you have a duty to provide jobs to them.
This foolish action, at its core, is based on misguided priorities and confuses the operational strategy of your business. Providing jobs to people in your family isnít your goal if youíre serious about your business. As an entrepreneur, your main priority is to create maximum value to your shareholders, not to provide jobs to people. The only reason you should have employees is if they help you make more profitóthatís the only reason why. You must get clear on this because any time a business hires people based on a relationship instead of skill it gets into trouble. Weíve all seen this go wrong, like when a husband and wife, or girlfriend and boyfriend, decide to buy a bar and hire a bunch of their friends and family to run it because ďit will be more fun.Ē Bad idea. In fact, itís probably the worst idea you can have in the bar business.
Your employees are only there to help you facilitate your process, maximize your profit, and help you stay within an acceptable budget. Believing that you have a duty to keep people in your family afloat is simply not correct thinking. When I need to hire people, I put out ads, look at resumes, interview people, check references, and look for the absolute best fit for my goals and the kind of team Iím trying to build. Consequently, if I have people who have broken rules and arenít the right fit, Iíll also fire them quickly. This is how a successful business needs to be run. No one is forcing you to work with your family if you donít want to.3. You Just Havenít Considered how this Will Affect Your Personal Life
Most people just havenít stopped to think about how their personal relationships outside of work will be affected if they employ family. How will your relationships at home be affected if you get into a fight at work, or worse, have to fire a family member? At the very least, the next Thanksgiving dinner is going to be awkward.
If you decide to work with family, itís inevitable that your work drama will find a way into your personal life. Always keep in mind that nothing in this industry lasts forever. Every employee will eventually stop caring. Every so often, people will have to be replaced. Feelings are going to get hurt along the way. When itís people you donít really spend time with outside of work, you can keep that drama away from your home life. When theyíre your family, these problems come home with you.4. It Ruins the Economics of Your Business
Controlling labor costs is one of the most important tasks for effective restaurant and bar operation. Sometimes, you must fire people and reduce hours if you need to get your labor costs back in line. Sounds tough, but itís true.
Letís say you have a bunch of family members who are on salary or being overpaid in other ways. This means your labor costs are more fixed. In this scenario, owners suffer huge financial losses if sales take an unexpected dip and labor costs donít lower with them. Ideally, your business only has hourly staff and schedules people only when it has enough business to justify it. Cutting hours is required when times are slowóit ensures margins will always be on target and the business survives. Family business relationships tend to result in higher labor costs that could easily be avoided by hiring people with no family obligations.5. Sometimes, Itís also not Fair to Them
Sometimes, family employees will get discouraged when they feel like they canít quit their jobs at a family-owned business and try a new career out of familial obligation.
I have a friend who descended deep into alcoholism because he felt like he couldnít work somewhere different since the money was too good at the family business. His father had placed huge expectations on him to inherit and run the business once he retired, but his heart wasnít into it. He had simply been raised in it all his life and it was all he had ever known. At any other job he would have been fired a long time ago for being incompetent, but he couldnít be fired from the family business.
Several versions of this story exist from employees who are staying in a bad situation, like working at a dead-end job for a bar owner relative. Sometimes, these employees will tolerate abuse, unsafe work environments, and disputes about money simply because the business owner is a family member. There are no winners in this situation, and the best solution is to not go down this road at all.