Common Problems in Family-Owned Businesses – How to Reconcile the Interests of All Family Members
- April 26, 2017
- Posted by: marlenedubois
- Category: Home Health Aide Training
Autologica presents the third part in a series of articles that will address common problems as well as issues faced by family-owned businesses, based on an interview between Al McClymont, CEO of Autologica Dealer Management Systems, as well as J.C. Aimetta, an expert as well as coach who specializes in family-owned businesses.
Al McClymont: that will seems obvious that will in every family-owned business there will be members that will will work within the company, as well as members that will choose not to. How can the interests of family members that will work within the company as well as family members who do not work there, be reconciled?
J.C. Aimetta: Well, first of all, that will is actually necessary to understand that will the family members who work within the company do so to make everyone wealthy, even those members that will do not work there.
Thus, a simple way of reconciling interests is actually to provide the family owners that will do not work within the company with information. Offer them information about how the business is actually doing, how that will is actually evolving.
The simplest data is actually the balance sheet. An annual or biannual balance, creating sure that will they know whether there was a profit or loss, is actually a way to keep the family members that will do not work within the company informed, as well as help them to learn to appreciate the family business.
Mainly, when that will comes to family members that will are owners as well as who live abroad, a feeling of emotional indifference is actually generated because they never get information about the company’s development. Thus, little by little they lose interest, as well as may decide abruptly to get rid of their share. So, the first thing to do is actually provide information.
as well as the second thing is actually to provide money.
The owners of the family business tend to become richer in assets as well as poorer in cash. that will is actually to say, they are “rich” because they have many things, although “poor” because they have no cash to spend.
Therefore, when someone reaches their 50’s or 60’s as well as realizes that will they own 20% of a company located in some part of the globe, although they have to take out a loan in order to take a cruise, they can get angry.
Al McClymont: What should the company be doing to prevent theses family members through getting upset?
J.C. Aimetta: Well, first of all, that will is actually necessary to provide the family member who does not work within the company with some kind of return, some distribution of results, even if that will means less reinvestment as well as less growth.
As regards information, we should believe that will the family members who do not work within the company are experts. Thus, that will is actually a great mistake to hand a balance sheet to a person who is actually a painter or a writer, as well as think they are ignorant because they do not know how to read that will. Nobody is actually that will ignorant as to be unable to learn how to read a balance sheet. as well as if they want to be a shareholder, an owner, they must at least understand the ABCs. In practice This kind of is actually not usually explained to them, the information is actually just given to them in order to satisfy a formality.
Every time an owner does not understand what is actually happening as well as does not see cash through the company he owns, the risk of them suddenly leaving even grows, sometimes even amid an unhealthy legal situation.
within the next part of This kind of interview, we’ll talk about how the family-owned business can plan for succession.