The SBA says that 90% of all American businesses are family owned or controlled. When small businesses are owned and operated by families, family values and business goals must be balanced. Each family owned business needs to address the issues in their own personal way. However, it is important to keep communications open, identify the issues and develop strategies to advance the family values and the business goals.
A good professional advisor is a tremendous value in aiding families who own and operate small businesses. A thoughtful advisor can lend an objective point of view, act as a neutral stabilizing voice and offer strategies without the emotions of the family relationships. At Welts, White & Fontaine, P.C. we urge family businesses to consider five areas: the business strategic plan, the family strategic plan, a succession plan for the business, the entity structure for the business and the estate plan for the family. Each component must work together and each component balances the values of the family with the goals of the business.
The relationship between the family’s values and mission, and the business goals is a relationship that must be thoughtfully considered. Some families elect to keep the family mission separate and distinct from the business vision. The business is a source of income, but not an integral part of the family reputation and values. Other families adopt the business as the “face” of the family. It serves not only as the funding for the family but also the foundation of the family image.
As a family owned business, the operation of the business must accommodate or incorporate the family mission. The business plan must be balanced with the family strategic plan. What is the family mission? What are the business goals? How does the family business fit into the overall family mission? Who will work for the business? What are the personal and professional goals of each individual family member? Which family members are viable as management? What is the selection process? Are all family members assured of a job? These are many questions that must be answered as a part of the business discussion.
In operating a family owned business, attracting and retaining non-family employees is an important issue. It is important to set an appropriate tone for the business. Businesses need good employees who can expect fair treatment. It is important to establish strategies and guidelines to provide for impartial, fair treatment and to help family members and non-family members know and understand what to expect.
At Welts, White & Fontaine, P.C. our lawyers have experience with representing family businesses. We have balanced business plans with family plans and we have considered how personal relationships affect business decisions. We can help develop strategies for a successful family owned business.
Author: Attorney Jay Leonard