How to keep your family business
from becoming a family feud
by Kathleen Savidge, Banner Bank
F
amily-run businesses often have the advantage
of a tight-knit, deeply invested management
and employee team. That sort of commitment,
especially built upon generational heritage, can
contribute to an identity and level of service
customers value. At the same time, family businesses
can face unique challenges, often tied to family
dynamics and individual relationships within a
larger group.
As a banker, I’ve worked with outstanding family
businesses, where a shared bond is a motivating,
unifying factor. Yet in certain situations, even in close,
well-adjusted families, old sibling rivalries or parent-
child dynamics can rise to the fore.
Such challenges lead some to
say, “Never go into business with
family.” That may be fine if you
have other options, but what if you
and your spouse are both dentists,
or you and your sibling are skilled
plumbers who inherit the family
shop? The ideal is to find a path
that makes the most of everyone’s
strengths, whether your company is
well established or relatively young.
As with any enterprise, the success of a family
business has a lot to do with planning. It also involves
balancing leadership and inclusion.
Tips to help your family business thrive:
Make a business plan – Agree to assigned roles
and responsibilities, and set clear expectations. This
is a chance to consider individuals’ talents and hopes
for themselves and the company, and create a strong
vision together. Decide what qualifications are needed
to be part of the business now and in the future, and
determine how profits and losses will be divided.
Formalizing agreements when everyone is getting
along helps avoid problems, and solve issues that
may arise.
Set regular, formal meetings – Meet regularly—
and not at the dinner table—to review company
operations, finances, goals and opportunities. This can
help prevent work topics from creeping into family
time and may limit personal topics from interfering
at work.
Keep your financials in order – Maintain
financial statements and keep a good handle on your
debt. Your recent profit and loss statement (P&L)
and balance sheet help you measure profitability and
improve performance, and are vital when talking
with your banker about opportunities and risks. If
you understand your company’s debt, you’ll be better
prepared to discuss options for paying it down or
planning for increased capacity when it’s time to
expand or retool your business.
Develop a succession plan and revisit it
often – Healthy organizations create equal
opportunities for people to learn and advance.
Individual aptitude and interest play a role too. A
child who wants to follow in your
footsteps in high school may
discover new interests in college,
or may not fit the qualifications
outlined earlier. A knowledgeable
banker can help you understand
and structure financing if needed
to support your exit strategy.
Welcome outside expertise –
If you need someone proficient
in, say, manufacturing or
management, consider hiring outside the family, and
be sure to treat the employee objectively and fairly.
By the same token, a team of trusted outside experts
such as an accountant, attorney and banker can help
you tackle tough decisions and prepare for the future.
Depending on your situation, you may want to consult
a counselor specializing in family businesses, enlist
an outside board of directors or work with a family
business center.
As you navigate the challenges of running a family
business, don’t hesitate to contact a banker you trust.
Not only can they assist you with cash flow analysis
and financial solutions suited to your business,
they should provide advice and resources related to
organizational structure, succession planning and
more. It’s the type of robust service you deserve.
Kathleen Savidge is a Banner Bank Vice President and
Commercial Banking Relationship Manager. Reach
Kathleen at [email protected] or
916-648-2799. www.bannerbank.com. Member FDIC.
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