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The Hidden Secret That's Destroying Many Family Businesses

Substance abuse and addiction may well be handicapping more than half of all family-owned businesses . / Credit: Alcohol and drugs image via Shutterstock

The greatest threat to the success of your family business may not be a bum economy or ruthless competition; it may be pills or booze. A new study shows that substance abuse and addiction may well be handicapping more than half of all family-owned businesses, experts say.

In a study of 99 family businesses from a broad range of manufacturing and business services across the country, over half of the study's participants said they were coping with or were expecting to address a family-related addiction problem within the company. The study was conducted by ReGENERATION Partners, a family business consulting and advisory firm.

This percentage far exceeds the norm reported for the general population, experts say.

A staggering 54 percent of the study's participants admitted having or previously working through an addiction disorder within the business’s core ownership or management. Of the families with identified addiction problems, 83 percent said they were in the midst of working through an active drug or alcohol addiction, while the others said they had dealt with an addiction in the past.

Substance abuse and addiction in family-owned business is being grossly overlooked, yet it will have a dramatic impact on our society as well as on the global economy, said James Olan  Hutcheson, chairman and CEO of ReGENERATION.

Unfortunately, few counselors and consultants have recognized or addressed the depth of addiction and substance abuse in family-owned businesses, Hutcheson added.

Three in 10 Americans drink at levels that put them at risk for alcoholism, liver disease or other health and emotional problems, according to the National Institute of Alcohol Abuse and Alcoholism.

When the addict or substance abuser is the founder or leader of a family-run business, the problem is especially acute, abuse experts say. The power and influence of the family often shields or enables the abuser by preventing intervention. In some cases, the abuser denies the destructive effects on himself or herself, the family and the workplace.

"Only 33 percent of family businesses survive the founder's generation, and just 10 percent make it to the third generation," said Hutcheson. "Addictions dramatically magnify the risk of failure. But like a number of issues facing family businesses, addictions can be treated. The first step is to understand the magnitude of the problem."

Reach BusinessNewsDaily senior writer Ned Smith at nsmith@techmedianetwork.com. Follow him on Twitter @nedbsmith.We're also on Facebook & Google+.

Ned Smith

Ned was senior writer at Sweeney Vesty, an international consulting firm, and was Vice President of communications for iQuest Analytics. Before that, he has been a web editor and managed the Internet and intranet sites for Citizens Communications. He began his journalism career as a police reporter with the Roanoke (Va.) Times, and was managing editor of American Way magazine and senior editor of Us. He was a Captain in the U.S. Air Force and has a masters in journalism from the University of Arizona.