How to Keep Your Family Business Together, But Separate from the Family - Elaine King - Family and Money Matters

As Jay Hughes says, a family is like a mosaic. Each individual person is their own color, but together, the pieces make up a beautiful piece of art. 

Despite this beautiful artwork that can be created by the family, a family business should be kept somewhat separate from the family. Why?

Imagine that you have two children. They both work at the family business, one of them on the sales floor, and the other in the office. However, they constantly fight and argue over who will be the CEO one day in the future. It’s like a modern-day Cain and Abel, that could also result in the tragedy of a broken family. 

In this family, some organizational tools are needed to keep these family conflicts from creating problems in the family business. 

Tools to Separate the Family from the Business

Family and business should be together, but separate. How? With family governance to outline the responsibilities and roles of each member of the family. Some of the key points include:

• Having a succession plan. This helps clear up misunderstandings and avoid squabbling among children. 
• Managing finances. There should be separate business and family accounts. Plus, a percentage of earnings should be re-invested in the business, while another portion goes to stakeholders. 
• Holding regular meetings. Hold regular meetings to discuss family concerns and business concerns separately. 
• Exit plans for family members who want out. What if a family member no longer wants to be involved in the business? There should be a clear exit plan so that there are no hard feelings when this happens. 
• Strong corporate and family governance plans. There should be separate plans for running and organizing the business and the family. 

With these and other strategies, you can help make sure the lines don’t get too blurred between business and family. 

Signs Your Family Needs to Separate the Family from the Business 

Answer these three “Yes or No” questions:

1. One person or a small group of people make the big decisions in my family’s business.
2. The priorities of the family business override your own priorities.
3. Your equity is made up of more than 75% of your business and your personal cash flow depends on the company.

If you answered “yes” to 2 or more of these questions, you probably need help separating the family from the family business. 

With the knowledge of an expert in family businesses, you can turn this situation around and get the necessary help to ensure each piece of your family mosaic shines with all their strength. 

Need help with your family business’s policies? Follow Elaine King on Facebook, Youtube, Instagram, and Twitter for more strategies for intergenerational family businesses. Or, set up a consultation today!