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Tip: Use Caution When Mixing Family with Business

December 19, 2012

Working with family can be rewarding, but it can also be challenging. To avoid conflict when involving family in your business, keep the number of family members involved to a minimum and assign clear roles to those who are involved, says BW Rogers CEO Rick Rogers in Succession Planning: What's Next?

Rogers has seen "unhealthy situations" where multiple family members involved in a business did not work well together, but this conflict can be contained by limiting family members' involvement.

Regulate family access to company assets, especially for non-working family members. Giving stock to non-working family members, for example, may not be fair to the company, says industry consultant Brent Grover. And providing non-liquid assets may not be ideal for recipients, either, so company owners should avoid giving non-stock assets to non-working family members.

Succession planning involving family is also risky business, since ownership succession doesn't always guarantee management continuity. Grover points out even if family members are interested in owning a business and capable of running it, they may not be interested in the management aspect. The interests and intentions of potential successors need to be clarified early on to avoid operational turmoil when the need for a successor (often suddenly) arises.

Brent Grover warns of other potential succession planning pitfalls in his recent book, The Little Black Book of Strategic Planning for Distributors.

© 2017 Gale Media, Inc.

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