Trust in family business is a critical issue. Strong relationships which are based on trust and communication build equality and respect - not power and control. Trust can be built, measured, tested and repaired. It is a way of reducing uncertainty in interpersonal and organizational settings and is necessary for cohesive and productive professional relationships.
Disputes can cause major disruptions within a family business and even spell an end to the business if not handled effectively. This is exactly why learning how to facilitate dispute resolution in family business is vital. The development of a shareholder agreement can prove to be invaluable in resolving differences and protecting a family business from making destructive decisions.
The 10,000 hour rule summary implies that it takes a minimum of 10,000 hours of focused effort to develop a skill and even more to get to the point where others call a person gifted at that skill. In a normal job, a person works 2,000 hours in one year, and 10,000 in five years.
Strategic business decision making is related to consensus decision making in family business. Families that use a strategic business decision making process are committed to discussing issues until there is full agreement to move forward and implement a decision. If a family is committed to working together for the long term, it is best to embrace this model.
In my last post, which you can read here, I gave the background of the Yost family, with whom I worked as a consultant. The Yosts own a group of successful car dealerships. Brothers Alan and Charlie make up the third generation of this family business, and both worked in the business. Alan is determined to find the easy way through everything, and he never excelled in the business. Charlie, on the other hand, transformed the dealership into an award-winning business with great profitability through 20 years of hard work.
When Charlie reached the breaking point and decided that Alan had to leave the business, it created a contentious situation that threatened to tear the family apart. The brothers had a buy/sell agreement that stated that Charlie would have paid Alan just under $10 million for his share of the business. Alan wanted more than the buy/sell would give him. He hired an adversarial lawyer who worked on a contingency and promised Alan he could “get a lot more.“
I worked as an advisor with the Yosts to help them make their way through this buy/sell agreement. In my meetings with the Yosts, I discovered that one of the most important core values of the family was their commitment to function from a place of integrity. This principle was demonstrated by the actions of the brothers’ grandfather, business founder Fred Yost.
Integrity: Firm adherence to a code of especially moral values, incorruptibility.
Alan had a wonderful, loving relationship with his grandfather. During Fred’s latter years, he and Alan had lunch once a week. In those lunch meetings, Fred told Alan the stories that only a founder of a business can tell. Those stories all contained a […]
When family business conflict affects a family, the result can be catastrophic. In order to prevent family business conflict from destroying family relationships, it can be beneficial to engage a family business consultant to help the family work through the difficult process of coming to an agreeable resolution to disagreements.
Family business structure and the concept of adapting and evolving applies to family-owned business. When creating solutions for a family business, the first step is to analyze the functions that need to take place to make the business work. Family business structure and efficiency can ultimately lead to higher profitability.
The power of the Golden Share is immense. All family businesses should be using International Best Practices for Family Business. A family-owned business is, first and foremost, a business. If a family wants its business to be successful, if must be run the way any successful business is run. Keeping the focus on the business is what makes things possible.
It can be easy to create a family business mess - even when International Best Practices for Family Business are followed. Being aware of business mistakes to avoid is optimal for delineating clear responsibility for positions and accountability for outcomes. It's important to anticipate possible outcomes of family business decisions before a family business mess is created.
Family business taxes are not always fun to deal with, and when tax issues become intertwined with family business decisions, it can become even less fun. If families in business are to avoid the "heartburn", they must carefully examine the family monetary policy and what it is that holds their family together.
