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Dr. Larry is a trainer and executive coach. He makes communication fun and exciting in the world of business, leadership and executive team building. If you are looking for somebody who combines human relationship skills with business management in ways that are easy and rewarding to learn, Dr. Larry is your person! He has had successful careers in the worlds of education, mental health and business. He has familiarity with the mobile home, publishing, sanitation and construction industries.
There is nothing like it for a family business to erupt into hard feelings that ruin Christmas. This is a time when many family businesses begin closing the annual books – and family members who had all year to dream about big profits and large distributions often get disappointed by reality. It is also a time when many are hard-pressed for cash, when sales are down or work hours have slacked off and the paycheck has shrunk.
Stress in family business can easily become tense. Misunderstandings can lead to ill-chosen. Words lead to conflict and presto, there goes Christmas Cheer and good will down the drain or out the window.
There are a few rules of thumb that help to prevent all this and that should be standard operating procedure for family businesses. Observe them if you already have them in place. Put them in place if you do not already have them in place. It will help not only your Christmas spirit and family relationships but also the business itself.
1. Have only one boss. Make sure everyone is agreed who is that boss.
2. Only hire people, whether family or non-family, on the basis of qualifications and the needs of the business.
3. Keep everybody informed, in writing, on a regular basis. If there are disappointments or surprises at the end of the year it means there was not adequate communication month by month during the year.
4. Declare profits, distributions, bonuses and disbursements on an objective basis agreed upon at the beginning of each year, not to be debated at the end of the year. Be sure to keep adequate working capital and reserve capital. In other words, disburse on a sound business basis, not on the basis of family need.
5. Keep the annual meetings short, objective and to the point. Make sure there is ample documentation of details in writing several weeks before the annual last quarter meeting. Be sure to have that meeting!
Two suggestions: first, these are hard times. Inevitably a family member will want to borrow money from the family owned company. Borrowing from the business is not good business. So instead, why not create a private contingency fund, set the rules for borrowing and the interest rate ahead of time, and publish to family members the details of how this fund may be accessed? Then make sure everyone understands that there will be no way to borrow from the company itself. In some instances, the creation of a trust that receives distributions from the business is the advisable way of doing this that takes account of tax liabilities.
Second suggestion: watch out for tax liabilities. For example, if one of the owners of a family business dies, who inherits that share of the company? What would be the inheritance tax, state and federal? Sometimes the taxes due from inheritance crush the heirs or ruin the business. Be sure to check periodically with your CPA or tax advisor. Remember the advice from attorneys and CPAs: better to seek guidance beforehand, look before you leap, not after!
Friendship and goodwill end at about $85.00 – if you let it.