In the UK there are over three million companies run as a family business, with about 40% of all total private sector employment coming from this part of business life. Every business type will face similar challenges as they grow, but with a family business those personal relationships can complicate matters further, especially if arguments take place between family members that sour the way a business is run.
Strong Family Connections
One of the major problems that many family run businesses face is when second-generation family members start to work for the company, or when it is time to work on succession planning and the ownership is being transferred from the first-generation ownership. This form of succession planning might cause resentment with other staff members, and have an adverse effect on the loyalty and performance statistics of existing team members. This can also have an impact if it is viewed that a family member is receiving preferential treatment or a higher wage than other members of staff.
Personal Problems Bleeding into Work
If relations at home run into problems this can have an enormous impact on the family business. For instance, a husband and wife team that start a business together might run into marital problems at some point in their relationship. Whether this leads to communication problems, separation, or divorce, they can all cause serious problems for fellow workers, employees and cause bitterness and resentment between all parties. Quite often there will be problems festering that are not yet out in the open. On a daily basis this can lead to productivity levels decreasing as resentment increases and eventually a breaking of silence that causes all sorts of arguments and recriminations.
Mediate and Look for Conciliation
No one wants to get involved in a time-consuming and costly legal battle, especially with a family member as it could damage a relationship beyond repair. Your family will always be your family so you should look for expert legal advice to help you resolve family business issues through mediation, before going down the full legal route. Most disputes are concluded with a financial settlement before getting to court, and the faster that you can conclude family business disputes, the better for everyone, including the business.
Prevent Future Family Business Issues
The best solution for any family business dispute is to not have that dispute in the first place! Seek legal advice at the beginning of a family business being set up, or when new family members are going to become part of the management team or ownership. Putting everything down clearly in a written, legal document ensures that there is no ambiguity in terms of each family members role in the business.
Plan for Succession Carefully
Succession planning can be a minefield if not conducted carefully and thoroughly, leading to existing non-family members of the staff to become disengaged and unenthusiastic if they feel that their route to the top of the business is being blocked through nepotism. If you do plan on having your family take over the business when you retire it is important to be clear with the whole company about who is to take over the reigns, and the timescale and processes that will lead to that happening.
Through any family business dispute it is important to stay calm and look for legal advice to assist with mediation. It is the best way to settle business matters without damaging familial relationships for the rest of your life.