January 28, 2010

If you have a family, you are in trouble… :-)

Most of the SME’s are family owned companies.

Such family managed companies face graver problems as the new generation comes of age. A second generation businessman, who was looking for a partner for their company, was very realistic and open while he talked about his father. He said, “My father is already very old; he cannot live much longer; I cannot convince him now for a new partnership, but we will look for a partner when my father dies.”

Of course this is not a typical case. As years pass problems among generations, brothers, cousins etc. grow like a snow ball. In one of our projects there were 12 family members working for the company. Each time we entered a meeting, we were washed down with all the recent inter-family problems which surfaced after the last meeting.

Today the partners of all companies, including the family owned ones, that need to grow their business, have to evaluate ways of growth and put these into effect. The growth period necessarily results in investments. No one has unlimited resources, no matter how rich that person is. We also are all mortal. It is highly possible that we would not choose to risk all the gains that we had accumulated in the past years. This approach becomes more fixed as we get older. As the head of the family and of your business you might consider to find a partner outside of the family, who will be helping you to invest into the future growth of your company. In that case you should consider your son or daughter, who you wish to have working in the company, not as a part of the management team but as partners of your company. It is necessary to separate from one another the concepts of being a partner in the company and working for the company.

It is also a good practice that you should in the first instance ask your children if they really want to work for the compay or not. :-)

Leave a comment

Your email address will not be published. Required fields are marked *