Don’t Let Business Issues Become Personal
Owners of family businesses face unique challenges. However, steps can be taken to keep your family business from destroying la familia.
For example, I have a client who had the necessary training and licenses to start a business. When serving clients and managing the company became too much work for Andres, he turned to his brother, Beto, to help with the latter. With Beto’s business experience, they appeared to make a perfect team.
Andres gave Beto free reign, and access to everything. Beto could sign checks, open bank accounts, sign contracts, hire and fire staff. All was well until the company ran out of money.
Andres soon realized that bills were not being paid and that the company’s line of credit had been maxed out. He also discovered customer accounts had gone uncollected, and employees had been hired without contracts.
Things went downhill fast. Pretty soon, the whole family was involved in what became an ugly mess. Andres and Beto stopped talking to each other.
The business survived, and in time, I’m sure the family will, too. It’s a shame, though, especially since the whole mess could have been avoided.
In a startup business, things move quickly. A great deal of work must be done in very little time. So it’s easy to skip the details that matter only when something goes wrong. And when something does go wrong, as Andres and Beto discovered, it can be 10 times worse in a family business.
The following five tips can help you avoid such issues in a family business:
1. Develop a succession plan, and write it down. The underlying idea is that a business owner will eventually transfer ownership, either by selling the business or training the next generation to take it over. If you intend to pass ownership of the company to your son, for example, formalize the plan by committing it to paper. Writing things down has benefits. If you write and sign a document, you are more likely to stick to it. Each family member is likely to be more committed and accountable.