I took over my family’s collapsing business at 27, made it profitable, and managed to sell it to a private equity group. Here are the 5 principles I followed.

I took over my family’s collapsing business at 27, made it profitable, and managed to sell it to a private equity group. Here are the 5 principles I followed.
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Lauri Union took over her family's corrugated roofing company in 1992.
Lauri Union (R) took over her family’s corrugated roofing company in 1992.

  • After graduating, Lauri Union took over her family’s failing corrugated roofing business in 1992.
  • As a 27-year-old president and CEO, she managed to turn the company around and sell it years later.
  • Union shared five principles she said helped her save the sinking business tied to her name.

I never set out to take over the family business. My grandfather started a corrugated roofing company in North Carolina in 1946, and in the 1990s it was run by my parents while I finished business school. My plan after graduation was to live in Boston with my husband.

But when my father fell ill, the company was in dire financial straits. My mother, who had no business leadership experience, stepped in and tried to turn things around, asking me for help. The business seemed hopeless, but I wanted to help clear my parents’ debts.

That meant that in 1992, at age 27, I became president and CEO of a sinking ship. Morale was low, and we’d just lost our biggest client, who contributed 25% of our revenue.

I had to overhaul the company and was able to turn it around to profitability, eventually growing our staff head count to 350 and selling to a private equity firm in 2004. Here are five lessons for running a family business that helped me get there.

Check your ego at the door, and be comfortable with saying ‘I don’t know’

People often think being a leader means knowing what to do. When I joined my family’s business, I arrived with prestigious academic degrees including an MBA from Harvard. But I only worked there before for 6 weeks in one summer, so I knew very little about it. I also had never led any organization.

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I quickly realized that the people who worked in the business had tremendous knowledge and that I could contribute far more by asking open-ended questions than by trying to take control and tell people what to do. I spent most of my first few months interviewing people in the company and figuring out the business.

As a result, within a few short months, I had more knowledge about the business and industry than virtually anyone else in the company. While each person knew their role, I was the only one who had interviewed so many people that I had a broad perspective on the company. I envisioned it as everyone having their own pie slice, but my goal was to see the entire pie.

Stay close to your family, but don’t let family emotions interfere with your decisions.

Working with family can bring up strong emotions, like frustration when a parent tells you what to do in front of other employees you are trying to lead. Or a feeling of rejection when a parent doesn’t recognize what you consider to be a great achievement.

Families pass emotions between members, so negative emotions can spiral. Those negative emotions can lead people to make decisions that make them feel better, rather than decisions that work best for the business. And those negative emotions can seriously damage family relationships.

Be aware of your emotions and empathetic to your family, but be willing to make decisions that achieve shared goals, even if they are hard. Spending personal time away from work with my mom also helped us to stay close, even if we might disagree about something at work.

It’s easier to get employees on board with your family’s values. Use that.

Family businesses have a superpower in their ability to consistently lead through a set of values that employees and customers can relate to. That makes the work of running the business meaningful to you and to other stakeholders.

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In my case, I realized that longtime employees remembered what my grandfather’s company used to stand for, and were discouraged by many of the firm’s more recent practices. Employees were lying to customers, and everyone behaved like they were on a losing team.

When I met one of the firm’s retired former workers, he recalled how my grandfather insisted on not increasing roofing prices after Hurricane Hazel in 1954. That story spoke to me, so I shared it at a company meeting.

Other employees stood up and told similar stories. At the end of the meeting, we agreed that whatever happened, we would always do the right thing, even if that meant lower profits. We would never lie to a customer and always admit if we couldn’t deliver what a client wanted.

That was a turning point for the company. Our employees felt they could be authentic, and it guided the company going forward and contributed to our growth.

Don’t be afraid to take the business in a new direction from what your parents did

Family businesses can be slow to change because holding on to traditions or long-term relationships with employees and customers is valuable. Parents leading a family business may expect their children to join and follow in their footsteps.

But the average business today only lasts around 10 years. Families that try to get the next generation to follow the mold are at risk. The next generation may not be fully engaged, and the business may not be able to keep up with the times.

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My advice is to find your own shoes and lead the business forward.

In my case, what was obvious about my family company was that it was a not very good business, and poorly positioned in a declining market. Our customer base was shrinking, our equipment was old, and employees hadn’t been given raises for five years. We had six facilities in multiple states, most piling up with old products.

As I took over, we decided to change the company’s model entirely. Instead of delivering in bulk to lots of customers in a large area, we focused on a small area of clients and delivered smaller shipments quickly. Eventually, we had enough money to buy one new machine, and we built on that success from there.

Don’t try to live up to someone else’s leadership style.

In family businesses, leaders can shape their own leadership style. Understand how others have led the business in the past, but don’t be limited by that.

I was a young woman running a business in a male-dominated construction materials business. All leaders in the business, not just positions like the CEO, were men. Many managers’ approaches were more authoritarian, with harsh language and aggressive stances.

I wasn’t comfortable with that, but it was my family’s business, so I could experiment with different ways to lead. I tried to be more calm and curious.

Finding my own leadership style, rather than trying to live up to someone else’s, made me a more effective and genuine leader.

Read the original article on Business Insider

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