Small Business Financial Article
|Rich Best has spent 28 years in the financial services industry, as an advisor, a managing partner, directors of training and marketing, and now as a consultant to the industry. Rich has written extensively on a broad range of personal finance topics and is published on several top financial sites. Recent books include The American Family Survival Bible and Annuity Facts Revealed: What You MUST Know Before You Invest.|
Making Your Business a Family Affair – Laying Down Boundaries
For over 200 years, family businesses have been at the core of wealth creation in America. Family business founders take the leap of faith to launch their business venture, often risking everything, and then spend their waking hours to realize their vision. The minority will achieve some element of success at which point they encounter a whole new range of challenges in balancing the demands of family life and the needs of their business.
Most people realize that the chances of a small business succeeding are slight, but few people understand the difficulties of building a business around the intricacies of family dynamics. In the best of situations, the family offers a foundation of loyalty, trust and dedication traits on which most businesses thrive. In the worst cases, toxic family relationships that spew resentment and antagonism can bleed the business of its health.
The commitment to a family business requires constant attention to strategy, customers, competition, cash flow, and the bottom line. It is only a matter of time before the family unit finds itself competing for a larger slice of attention and commitment to its needs. Any deterioration of family harmony will most likely spill over to the business. The family business owner must be able to achieve a balance of commitment and establish meaningful boundaries that guide family and business interaction.
The problem facing family business owners is that the boundaries between the business and the family become tangled and the roles of parent/child and spouse/spouse are twisted with boss/employee and business partner/partner. This can only lead to a convolution of the diametrically opposing goals and tasks of the business and the family which is not healthy for either.
Family goals and tasks are often emotion-based and oriented towards the individual family members. Family management is about nurturing, acceptance, and protecting against change. Business goals are rational-based and oriented towards the customer and the market. Managing a business requires a focus on profits and embracing change.
Establishing and maintaining boundaries is much easier said than done. It is not as simple as drawing a line that can’t be crossed. Between the business and the family there are several competing and overlapping roles that must be recognized requiring varying approaches to establishing different boundaries. In the end, however, they need to be clearly defined and communicated so that they are legitimatized and respected.
The key to creating boundaries that can be maintained with minimal conflict is to use a collaborative approach that involves all family members based on blending the goals of the business with the needs and interests of the family. Family values should form the core principles of the business there should be a shared vision of family and business hopes and dreams.
To accomplish this, the family and business units must develop separate plans that include mission statements, goals, strategies and clearly delineated rules, roles and expectations that guide behavior in the dual roles of family member and business associate. The separate plans should be managed, monitored and reinforced through distinct governing bodies consisting of a family council and a business advisory board wherein conflicts and issues can be assigned to their proper jurisdiction.
Maintaining effective boundaries requires constant attention in order to adapt them to the changing circumstance of the family and the business. As each matures, the needs, requirements and dispositions of the individual family member/business associate will change. The more communication and transparency fostered through frequent family council and business advisory meetings, the greater the adherence will be to family boundaries.
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