The smooth operation of a family-owned business depends on solid, close-knit relationships as much as it does on sound financial planning, writes Laura Slattery

Never mix business with pleasure is a rule many business owners or managers try to ignore these days, especially if they want to encourage team spirit in the workplace. But what happens when co-workers really are one big family? For family-run companies, drawing a strict line between work life and private life can prove impossible.

From local corner shops to multinationals trading on the brand value of their family name, the smooth operation of a family business depends on solid, close-knit family relationships as much as it does on sound financial planning. Profitable second- or third-generation family businesses represent more than one type of success.

"Family businesses are an integral part of the Irish economy," says Mr Jim Curran, head of research at the Irish Small and Medium Enterprise Association (ISME).

He estimates from its membership that 70 to 80 per cent of Irish enterprises are family businesses: It is "such an important area" that ISME is setting up a sector focusing on the often unique issues they face.

"The main thing about family businesses is that there is continuity," says Mr Curran. "The father or mother passes the business on to the sons or daughters, and it's not the easiest transition. The strengths of the owner-manager may not be found in the next generation of people coming up."

But if the next generation cuts its teeth in the family business while the older generation is still in charge, the chances are their own talents and personality traits will be well understood by the time they take over. Intuitively knowing the skills of various family members saves time on interviews and assessment.

"It's one of the big advantages of a family business: you know each other so well that you know what everyone's strengths are and you can cover up on the weaknesses," says Mr Paddy McCormack.

Mr McCormack, his sister Ms Brona McCormack and his brother Mr Eamonn McCormack are the three directors of P McCormack & Sons and own three pubs in the Dublin area. The company was started by their late father, who owned Peter's Pub in the city centre and then, 40 years ago, moved to a premises in Dún Laoghaire. The business has since expanded to include the Merrion Inn and the White Horse Inn.

"Our roles are naturally divided. Unlike other businesses, we can play to people's strengths and inclinations," he says.

His sister, for example, "pays greater attention to the details", like the food and personnel.

"Because we were brought up together, we have the same kind of ethos, the same work ethic. We don't have to instil it in people," he explains. "In a cash business, trust and honesty are important, and being part of a family business makes it easier. The business is an expression of your family."

Mr McCormack hopes it will carry on into a third generation.

"My late father never had to retire. He was a business man until the day he died, even though he stood back from it. It would be nice for us to do the same but still see the business keep growing and changing."

With a broader range of career paths on offer, parents may find it harder to convince their children to stay in the same trade as them.

"When there's growth in the economy, there may be different opportunities so it may be more difficult to persuade the next generation to keep the business going," agrees Mr Curran at ISME.

But many owner-managers running a family business also depend on casual or temporary help from their children in the summer months.

"It still is difficult for small businesses to get labour, so with children there is an obvious pool of labour," notes Mr Curran. "With a family business, there would also be the loyalty factor."

The importance of children being able to help out with the family business is recognised in the terms of the Protection of Young Persons (Employment) Act 1996. It exempts close relatives from certain provisions, including those relating to the employment of children and working hours.

If the employment is made formal, the tax-free allowance of any children working for the business means the tax bill of the parents is effectively reduced, with the income staying in the family.

After years of summer and school holiday work, Mr Darragh Martin, a politics and history graduate from UCD, is now working full-time in the family business. CB Forms, a Cork-based printing company producing letterheads, business cards and other office materials, is owned by his father, Mr John Martin, who founded it in 1980. He now employs both his son and his daughter and describes the company as a "ready-made business" for his offspring.

"The main benefit is that it is much easier to communicate with your boss, to get your points across. Other than that, it can be difficult, because more is expected of you," says Mr Darragh Martin, who works in a general management role from sales through to pre-production and design.

"There's having to go home and meeting your boss, then going to work to meet your boss. You're kind of never away from it," he says.

At Cavistons fish-shop and seafood restaurant in Glasthule, Dún Laoghaire, and after 34 years in the business, Mr Peter Caviston never wants to get away from it.

"If you start counting the hours you're working, then you really shouldn't work for yourself. We get to know every customer by name and build up a bond with them, so the day goes very quickly," he says.

Mr Caviston was 16 when he started working for the family business in the late 1960s. It had been founded by his uncle, Mr James Caviston, then developed by his father, Mr John Caviston. The product range expanded from just fish to include duck eggs, fishcakes, olive oil sold from a five-gallon drum and "cooked chickens you could smell all around Glasthule".

"It was a question of what do you have with fish," Mr Caviston explains.

"You have wine and lemon and parsley, also things like balsamic vinegar and Dijon mustard. It was a natural progression."

The natural progression of the business also saw it pass onto Mr Peter Caviston and his brother, Mr Stephen Caviston, with other family members also working there. In 1996, they opened a seafood restaurant next door to the fish shop and delicatessen. Mr Caviston does not rule out further expansion but is cautious about the form it should take.

"People always ask about franchising the name but you need to keep a certain quality," he says.

Family businesses are typically associated with a local community atmosphere and loyal customer base, and Cavistons, despite employing more than 25 staff, fits into that pattern.

In family businesses, tensions at home and office politics can overlap. But another potential source of conflict is between family members and "outsiders", and some owner-managers may deliberately avoid growth strategies not to dilute the family influence on the day-to-day running of the business.

At CB Forms, Mr Darragh Martin believes that employees who come in from the outside do sometimes have a different attitude to family members in a family business.

"You always feel you have to prove yourself and show that you are there on merit," he says. "But then I have been in here since I was about 11, when I was sweeping the floors, and I've actually trained some of the people here, so they see that I haven't just been drafted in off the street."