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The Intersection of Family and Business
Kevin Spafford, CFP®
There are a number of conflicts and emotional issues that can exist in a family business. Most are the result of the overlapping concerns between business decisions and family matters. The succession planning process brings these problems to the surface and might fester to cause conflict and emotional upset. Parents should be aware of the following circumstances where concerns arise:
- Unqualified Children: Too many owners don't or won't recognize the lack of aptitude or attitude for running the family business. We often find them in a comfortable state of denial, desperately boasting of their child[ren]'s capabilities while ignoring the obvious.
- Not Evaluating Children Based on Merits: All too often parents strive to treat their children equally regardless of abilities and skills. Certain children are expected to become a part of the family business regardless of their level of preparation and their performance in the workplace.
- Unwillingness to Choose Among Children: Parents are reluctant to choose among the children. To resolve leadership issues, they evenly split duties, pay and perks among the next generation, effectively hoping the business will survive under the command of a committee.
- Encouraging Competition Among Siblings: Children often are pitted against one another, playing favorites and causing dissension among family members. To an extent, sibling rivalries are expected and unavoidable; unfortunately, these jealousies are unnecessary and unproductive.
- Dividing Wealth Equally Among Children: Parents too often attempt to treat their children "the same" by equally dividing their wealth, which might be OK in a nonfamily business household. When the bulk of the estate is a family-owned business, it is inappropriate to divide equally among active and inactive children and/or allow inactive family members to exercise management decisions.
Identifying the issues is the easy part. Resolving them, creating a plan that allows the business to grow and the family to thrive is the difficult, yet intended outcome. To achieve your goals and plan for success, follow a defined planning process. Know that issues exist, confront them and develop solutions that respect the integrity of the business while dealing with family matters separately.
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Have questions specific to your family? We’re always happy to schedule a complimentary phone consultation to discuss your family’s succession objectives, review potential next steps, and determine how we can help.
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