Bustness Blueprints

How to Be in Business with Family & Still Have Holidays Together

By Nate Sachs, Blueprints for Tomorrow

Being in business with family can be totally rewarding but totally frustrating.
Every hour of every day family members who work together walk a fine line. Are they business associates, employer/employee or family members related to each other? These roles can change quite often creating a certain amount of tension, friction and stress.

First rule for a successful business relationship with family is to remember that the business is an asset. That asset must be used in for the most economical reason. If a sale makes sense, then the business should be sold. At times a sale must take precedence over employing family members. If a business is to be sold, the highest bidder becomes the new owner, even if that person isn’t a family member.

Unfortunately, business owners often let themselves become the business and the business becomes them. They can’t separate the business from themselves. After a while it all just becomes one big blur.

The older generation is usually responsible for most if not all of the money is invested in the business. They need to be constantly concerned about losing that investment. Rarely does the younger generation have the same “skin in the game.” This is an ingredient for problems. The younger generation can’t truly assess the business unless they have their own money at stake.

Parents generally feel they not only worked harder than their children in the past, but that they still do. Children tend to believe that their parents really don’t understand how difficult working for them is. Every family must be a family first and a business second. When business becomes more important than family, it’s time to sell the business.

If the senior generation decides to sell, they must provide financial incentives for the younger generation to make the sale as profitable as possible. The idea is to make younger family members part of the solution, not the problem.

Often the owner will want to retire upon completion of the sale. Buyers might very well want the younger generation to stay engaged in the business. If they don’t own any stock, they can be given financial incentives to stay instead of leaving for other opportunities, which works well, even if they’re stockholders.

Many families refuse to discuss the delicate issues that arise from being in business together. Maybe they don’t know how to address these issues. Doing nothing is a strategy; it just isn’t a good strategy.

Nathan S. Sachs, CLU, ChFC, CFBS, is owner and founder of Blueprints for Tomorrow, an Airpark-based business advisory firm that has introduced a unique concept for helping business owners with exit and succession strategies. Contact: 480-596-1525; natesachs@blueprintsfortomorrow.com.