What does it mean to be a ‘family business’​?

December 8, 2020

(Originally published in the Q3 Nix Companies internal, team member newsletter)

Between a late Saturday night conversation Jared (CFO) and I had over a glass of bourbon, a recent book I read at the suggestion of Angela (H/R Mgr), and a recent family meeting Lindsey, Adam, Lacey, and I had with Tad Dickel (family business advisor), I’ve had this question on my mind lately. What does it mean to be a family business?

Is the definition simply that the company is owned by one family? It doesn’t seem to be the case to me. I know some companies owned by a family and managed by outside professionals that don’t look and feel much like a family business at all. Is there a generational component to it? Even though I’m really proud of our 5 generations and feel that it influences our company’s culture in a positive way, I’m not sure that is necessarily what makes it a family business either. I know some first-generation businesses owned by an individual or a husband and wife team that I would certainly consider to be a family business. Does the company have to be owned 100% by “the family” to be a “family business?” This would probably be the most commonly held definition. At Nix Companies, while the family holds the controlling interest in the company, our Executive Team members are shareholders too, and I would certainly consider us to be a family business, so I reject that notion as well. Finally, is there a size limit to what constitutes a family business? While I’ve never heard of any hard numbers on this, I believe this would also be a very commonly held perception of what does and does not constitute a family business. Admittedly, I’ve even held those same beliefs; that is, until recently. One of the great things about a continuous learning journey is that you can always expand and re-shape your way of thinking based upon new information. The book I most recently read, “Everybody Matters” by Bob Chapman, tells the story of a small business from St. Louis called Barry Wehmiller, which was about the size Nix Companies was a few years ago. When Bob’s father died suddenly, he took the struggling business over. Through organic growth as well as many acquisitions, he and his team grew the business from a few million in annual revenue to $3 billion in revenue and 12,000 employees worldwide. You will need to read the book to truly understand or believe what I’m saying, but if you talked to many of the employees of the businesses owned by Barry Wehmiller, I’m confident they would tell you that they are very much a family business.

So now that we have established what is and is not a family business (in my mind at least), let’s take a look at what makes them this way. I believe that a family business starts with a very close-knit group of people who share similar values (most often a family), that not only owns the company but actively participates in its management. It’s even better if the family can know everyone in the business, but once a company grows beyond the point where that is possible, if managed properly, it doesn’t automatically lose its “family business” feel. We all know big families are made up of smaller individual families, and while they each have their own identity, they all share the same heritage and similar values. Barry Wehmiller is a perfect example of that, and with our (Nix Companies) decentralized business model, that is something we are working to imitate. Lastly, I would suggest that there is one primary deciding factor for whether or not it is or will become a family business; this is whether or not the owners view their employees as their greatest asset and responsibility to care for, or as a liability to be managed. I hope it is obvious which side of the fence we stand on.

So then, if Nix Companies is a family business (and we intend to remain as one), then what does that mean for us? I suppose if we boil it down to its simplest form, it means that we must care for one another. Additionally, we should all take ownership of the chores and care for our “house” as if it were our family’s (since it is). If we don’t take care of the house, pay the bills, and other basic needs, pretty soon we won’t have a place to live. This all makes sense to me, but the concept I’ve struggled with the most is this idea that a family, by its very nature, is a socialistic entity; we share financial and material resources. Whereas a business, by its very nature is a capitalist entity. The basis of capitalism is self-interest, which seems to be opposed to the family concepts of sharing. How do these two things co-exist? Well, I’m learning along the way that it is possible. The parameters of this newsletter don’t allow for the detailed explanation that is necessary, but Bob Chapman’s book teaches us in great detail on this topic. At its most fundamental level, I would describe it by saying, “a family business should share in the tough times and the good times together.” For example, earlier this year, when we made the decision to adjust our estimating models to keep all of our people busy (rather than having to do layoffs), the effects could really be felt in the Q3 financials. With less profitable work hitting the books, and at times being overstaffed, it was the worst quarter we’ve had in several years. To combat that, everyone shared a little bit in the pain, instead of a few folks (being laid off) taking all of it. We froze capital spending (no one got those new toys they were wanting) and there were no bonuses. If presented with similar challenges in the future, we will all pull together and find our way through it, just as we are doing in these trying times. 

Lastly, I would say that to be a family business we celebrate and we mourn together just like any family does. Earlier this year our family was invited to the wedding of a former team member. He’s moved on to other things, but his time at Nix Companies must have made him feel like part of the family, and we were honored at the invite to celebrate with them. The basis of Jared and I’s conversation, which I started this article mentioning, was around our company’s family picnic (which we fortunately got in this summer during the lull in the pandemic with no related covid cases). He and I were discussing how cool it was to see all of the little kids there. We started counting all the weddings and new babies that had been born in the last few years. We talked about all the first homes that were purchased. I talked about the many team members Lindsey and I have hugged at the funeral home after having just lost one of their immediate family members. Now as I’m writing this, I’m thinking about all of the incredible gestures of love and kindness that I’ve seen our team members do for each other. From loaning an extra vehicle to someone whose car has broken down, to chipping in on medical bills, to helping each other remodel houses, the list goes on and on. If this isn’t a family business, I don’t know what is!