How to Use Family Business Systems to Resolve Disputes
We already know family businesses are complex and challenging at best. David Gage provides some structure to understanding the systems involved.
In Resolving Disputes in Family Businesses, http://www.smallbusinessadvocate.com/small-business-articles/resolving-disputes-in-family-businesses-2227. David says: “a family business (FB) is really three distinct but intricately related systems. Each system—family, ownership, and business—has certain functions it must fulfill, and where these systems overlap, more opportunities are created for their functions to clash or be confused. Untangling them requires a clear view of how each system works on its own, as well as how they mesh together.”
David offers excellent examples of his systems as well as suggestions for resolving family issues.
What family business stories do you have to share?
Family Business 2
Some family businesses seem to evolve with little problem. Others get caught up in the challenges of resolving dissatisfaction with one of the family. Frequently there is a difference in age, a difference in motivation and a difference in vision. In a regular business if there is not a mesh, it’s much easier to terminate the relationship. In a family business, family will always be family. Other considerations are at stake.
Sometimes people try to get the family member to change. James Lea has a blog article about some of the challenges of working toward change in a family business.
He says,
First is the honest recognition that change is needed now. The classic ostrich posture may be comfortable, but it’s unattractive and unproductive.
The second is courage. Change is often scary. Also, almost no one wants to accept change that cuts across the grain of his preferences and pleasures, so sometimes change must be driven into place.
Third is a willingness to change — to give up familiar, if only marginally effective, ways of running the business and relating to the family — to make room for something new, different and better.
I have a client whose father started the business and is still involved even though he doesn’t take a salary and is starting to fail. According to my client the only thing keeping him going is his involvement in the business. He lost his wife several years ago and this is all he has. She cannot take the job he’s doing away from him. But she can pick up the parts that he’s starting to fall down on. Little by little he will have less and less responsibility, but will still be involved.
In this case change cannot be forced, it must be directed over time, sometimes without necessarily having agreement.
A Case for Business Partnership
I’m writing this review because I think there’s a lesson to be learned in “Business Partners Can Enrich or Ditch a Start-Up”. The lesson is that a business partnership has the potential to more than double the power of each individual. The objective of a partnership should be to be bigger, better, or stronger than each partner alone. A strong partnership can be highly successful.
In her article, Laura Petrecca covers the good , the bad and the ugly parts of a business partnership. She quotes Barry Nalebuff, a Yales School of Management professor, who co-founded Honest Tea with former student Seth Goldman. He says “his partnership helped propel Honest Tea from $250,000 in sales in 1998 to $13.5 million by 2006. In 2008, Coca-Cola purchased 40% of the firm.” That’s quite a success story.
Laura’s case for a partnership is the extra skill set a partner provides, if done correctly. “With a company comrade, there is always someone to brainstorm with, to share work duties and, of course, to help carry the financial burden. An agreement covering the ownerships structure, financing and division of duties is a must”. And be sure to address contingencies like what happens if a partner becomes disabled or dies.
Laura includes examples and tips on handling issues between married partners, as well as family and friend partnerships. Reporting on two high school friends who formed a partnership, she quotes “Things have been a little rocky, but we’ve managed to stay afloat, …I think (the troubles) have helped our business get stronger and our friendship get stronger.”