If you run a family business, you probably already know research indicates family-owned businesses tend to have better long-term financial performance than their counterparts that aren’t run by blood relations. And you’re probably well aware infighting among family members can lead to breakups, selloffs, and bankruptcies …
A family business can be a double-edged sword to many involved – goods and bads, perks and sacrifices. That being said, a family business is strongest when all come together for the greater good of the family and the business. Unfortunately, this isn’t always the case and families can fall into infighting that actually sabotages family business succession. How do you protect the family and the business?
A recent article in Bloomberg Businessweek, titled “New Wrinkles on How Family Businesses Sabotage Themselves,” examines this subject from a fresh perspective. The article highlights four fundamental pitfalls to avoid:
- Fairness: While parents may want to treat their children equally, when it comes to the family business this is not a good idea. In other words, reward according to merit much like non-family employees.
- Conflict Avoidance: Bring in directors and advisors who are not “in” the family or emotionally related to the family. Independence can help call out the awkward elephants in the room before it is too late.
- Triangulation: Resolve “family issues” within the family. No one else really needs to see non-business dirty laundry.
- Bullying and Scapegoating: Some family members may try to control difficult situations and even escape personal responsibility by attacking and blaming others. Stop it early.
Yes, family businesses can fall victim to their own families. Whether due to good intentions or to rivalries that have existed since childhood, you need to be wary of family problems sabotaging the family business.
For more information and articles on estate planning and elder law topics, please visit our website and sign up for our free monthly e-newsletter. You can also friend our law practice's Facebook page (R Christine Brown).
Reference: Bloomberg Businessweek (June 17, 2013) “New Wrinkles on How Family Businesses Sabotage Themselves”