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Will Addiction Be the Downfall of Your Family Business?

family businessThe odds are stacked against family businesses. Most new enterprises don’t survive longer than five years. Only 33 percent of family businesses are passed down to a second generation, and only 12 percent survive to the third generation. While many factors play into a business’ success, including the efficacy of management, insufficient planning and lack of funds, there’s another significant yet often overlooked threat that is crippling more than half of family businesses: addiction.

A System Plagued by Denial

Addiction is a widespread problem that, if recognized at all, is often perceived as a “personal problem” that will resolve itself. But when addiction strikes the family business, it’s everyone’s business.

In a study of nearly 100 family businesses, over half (54 percent) said they had in the past or were currently working through some type of addiction within the business’ leadership team. This figure far exceeds the addiction rate among the general population and doesn’t account for those whose problematic use of drugs and alcohol falls short of addiction.

Why is the risk of addiction higher among family businesses? Some cite pressures to meet high family expectations, lack of quality time with their parents and lack of personal identity outside of the family as reasons for turning to drugs. Others have a work hard, play hard mentality and feel entitled to indulge on drugs or alcohol, especially if they have standing that protects them from job-related consequences or influential friends that can keep them out of trouble.

Confronting the ‘Elephant’ in the Boardroom

Substance abuse flourishes in environments fuelled by secrecy and denial. By trying to “protect” the addicted individual, the family and the business, loved ones may be contributing to their demise. Even when families realize there’s a problem, it’s not always clear what action to take. Here’s a good place to start:

Don’t Ignore the Signs. Drug and alcohol problems can be extremely problematic in family-run businesses. Whereas other businesses may identify a problem and swiftly refer a valued employee to treatment, issues within the family are more often tolerated out of respect, loyalty or fear of tarnishing the family name. Left unaddressed, the denial deepens and the problem worsens until the addiction has threatened family relationships, the welfare of the business, or both. Some of the warning signs you shouldn’t ignore include:

  • Frequent absences, or regularly arriving to work late
  • Reduced productivity, or lack of motivation
  • Increased accidents, injuries or legal troubles
  • Complaints from customers about missed meetings or poor work quality
  • Unexplained financial problems, possibly resulting from borrowing or stealing
  • Increased conflict in relationships between family members or co-workers
  • Deterioration in appearance, or sudden changes in weight, sleep, mood or appetite


Intervene. Addicts do not have to hit “rock bottom” before they can get well, nor do they need to want help in order to benefit from treatment. If you’re concerned, let them know through an informal conversation or a formal intervention. The message of an intervention is, “We love you and want to help you and will no longer enable your addiction to continue,” with the ultimate goal being admitting the addict into treatment.

Find Support for the Family. When there’s an addict in the family business, the entire family system suffers. Family businesses often struggle with denial, enabling and codependency, which must be addressed on an individual level and a family level, usually through therapy and support groups like Al-Anon.

Addiction has been the downfall of many family businesses, but there is hope. The addicted individual has two powerful support systems backing them: the family that loves them and the business that offers a steady job to return to after treatment. Just as you would proactively address other issues standing in the way of the family’s success, addiction must be treated with the same urgency and candor in order for both the family and the business to thrive.

Will Addiction Be the Downfall of Your Family Business?

David Sack, M.D.

Dr. David Sack is board certified in psychiatry, addiction psychiatry, and addiction medicine. As CMO of Elements Behavioral Health, he oversees a nationwide network of treatment centers including drug and alcohol rehab programs at The Ranch in Tennessee and The Right Step in Texas.

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APA Reference
Sack, D. (2014). Will Addiction Be the Downfall of Your Family Business?. Psych Central. Retrieved on September 22, 2020, from


Last updated: 28 Jan 2014
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