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.|
To Preserve the Family Legacy, Keep Business and Family Separate
For centuries, family-run businesses have been central to our country’s wealth creation. We all know about the incredible amount of risk and work involved in launching a new venture. However, few people, including the owners of family businesses, understand the complexity of managing family dynamics within a business. In the best cases, family members provide a foundation of trust and loyalty to the business. However, in the worst situations, the toxicity of intra-family squabbles can overpower the business, and even destroy the family’s vision of an intergenerational legacy.
The challenge for family business owners is keeping family boundaries and business boundaries from becoming entangled, especially where family roles and business roles might overlap. For instance, the parent – child relationship can overlap with the boss – employee relationship when a parent is also the employer of an offspring. The more family members involved in the business, the more convoluted the dynamics, especially when the goals of the business are diametrically opposed to the goals or needs of the family.
The problems are further exacerbated when the animosities of excluded family members encroach on the family dynamics, especially when the family business dominates dinner table discussions or when family roles are more defined by family members’ relationships to the business. Eventually, divisions will occur that can preclude opportunities for developing family unity.
Successful families take the additional, critical step of developing separate plans for their business and their family enterprise. They establish distinct mission statements, goals, roles and expectations to guide family members inside and outside of the business. The key is to create a collaborative approach to developing both parts of the family dynamic and involving excluded family members in the advisory process. The plans must be managed and monitored separately by the governing bodies established within the business and the family. Where conflicts arise, they can be assigned to the appropriate jurisdiction and/or resolved through a resolution process shared by the two.
Generally, the more transparency and communication between the family business and the family enterprise, the more everyone feels an association with both. Instead of provoking competing interests, the family business, as a part of the family enterprise, can become a shared cause in pursuit of the family’s purpose.
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