Wednesday, March 22

How to Deal With the Downside of Running a Family Business

There’s something really awesome about successful family businesses. The public loves them, and when they work, they work well. But working with family can turn nasty too, and knowing how to deal with the downside may help you to pull through times that will be difficult from both a personal and professional perspective.

Going into business with family? Arm yourself with coping tips, hope for the best, and be ready for the worst. 

Family Units Can Dissolve: Be Prepared

When you first venture into business with family members, you’re filled with idealism. You’re confident that you can weather any storm – and it is to be hoped that you’ll do just that. But family units can dissolve, and the pressure of running a business together could even trigger that. 

If you’re going into business with your marriage partner, the possibility of divorce shouldn’t be ignored. How are business assets divided in divorce? The answer depends on a lot of things including the legal form your business takes. Just as you should consider all eventualities when drawing up a marriage contract, you should consider the possibility of things turning sour when embarking on a business venture with your spouse. 

Ideally, you’re looking at a situation in which the business can survive, even if your marriage doesn’t. Obviously, this is a pretty difficult subject to broach with your marriage partner. Enlist the help of a lawyer to talk to you both through possible scenarios.

Place Financials in the Care of an External Specialist

During times of financial stress – and even financial success – business finances offer fertile ground for disputes, suspicion, and even possible fraudulent activity.  The best way to overcome this is to leave financial record-keeping, reporting, and advice to an impartial outsider. 

Before embarking on your business venture, consider the criteria for financial decision-making. While full participation can delay decisions, it also reduces the potential for future disputes. 

The alternative is a situation in which families can be torn apart, regardless of whether any allegations of wrongdoing are based on fact. In families, emotions can easily take over when basic logic is needed most. Avoid needless arguments and prevent needful ones by outsourcing financial record-keeping and advice to a company that is willing to mentor family businesses through turbulent times. 

Define Roles Clearly and Create Boundaries Between Work and Family Life

Working in a family business could mean that you no longer have a personal life – unless you take proactive steps to ensure there is a boundary. And since the people who manage the business with you are family members, they may feel free to interfere with the way you work. At best, your mom may tell you to wear a sweater before venturing out for a site visit. At worst, she could be telling you how to do your job when you get there. 

Successful family businesses should have clearly defined roles and responsibilities along with key performance areas that can be impartially evaluated. So, if your mom says you didn’t reach your sales target, and that was defined in advance, you can’t argue. But she also can’t tell you how to do your job if you’re getting the results you all agreed on.

Setting limits to authority and separating work and family life are important steps that ensure harmony at home – and a satisfying work environment that doesn’t come with unnecessary stressors.

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