Balancing the sensitive and intricate aspects of running a family business is extremely difficult. For some, the expectation of involving family members in different capacities is a given and for those on the outside there can appear to be a certain level of nepotism. Perhaps that comes with the territory of trying to create, grow and sustain a business that one wants to pass down from generation to generation. However, successful family enterprises recognize the necessity of holding family members just as accountable as anyone else.
There is certain expectation of loyalty that comes with working together as a family, but responsibility and effectiveness are just as important in maintaining that delicate balance. This was tested in our family business when my brother Dũng entered the distribution business after resigning as THP’s sales director for Ho Chi Minh City.
He did it without capital from my father. He got up every morning at four o’clock to open the warehouse himself, my father’s warnings about 95 percent of businesses failing ringing in his ears. Most nights he did not come home until after midnight.
His business started well, and he was soon THP’s largest distributor, making large margins. He grew very fast and was managing hundreds of staff and dozens of trucks. This, in itself, was not a problem. The issue was the lack of control systems he put in place to manage that growth. Soon my father was receiving a lot of complaints from other distributors. They said Dũng’s staff were dumping product on the market.
Dũng was warned several times, and matters came to a head when a group of distributors provided hard evidence and threatened to sue. My father knew he had to treat all distributors equally and that if he allowed Dũng’s business to continue breaking the rules, others would follow suit.
Dũng acknowledged his mistakes and agreed to dismantle his business. He did not beg for another chance; he knew he had to pay the price for losing control. We all admired him for accepting his failure, and today he runs a successful collagen business.
As family members who work together, we cannot be immune from the highest levels of expectation when it comes to our contributions and the fulfillment of our roles within the organization. Those family businesses that create clear expectations are the ones that thrive generation after generation. Learn more about how to prepare for and control growth by reading my book today.