Issues in the Family Businesses

The list below contains the issues that most family businesses face:

Participation--who can participate in the family business and under what circumstances.

Leadership and ownership--how to prepare the next generation to assume responsibility for the business.

Letting go--how to help the entrepreneur let go of the family business.

Liquidity and estate taxes.

Attracting and retaining non-family executives.

Compensation of family members--equality versus merit.

Successors--who chooses and how to choose among multiple successors.

Strengthening family harmony.

All of these issues and the others you include in the Family Business Assessment Inventory can potentially cause business conflict and family stress. But there are three steps you can take to manage conflict and stress in a family business:

Identify issues that may cause conflict and stress. Discuss these issues with the family. Devise a policy to address them.

Who Are the Actors?

The next consideration in understanding the family business is to understand the perspectives of those involved. Without this understanding, managing a family business will be difficult.

The actors in the family business can be divided into two groups: (1) family members and (2) non-family members. Each group has its own perspective and set of concerns and is capable of exerting pressures within the family and the firm.

Family Members

Neither an Employee nor an Owner - Children and in-laws are usually in this group. Although they may not be part of the business operations, they can exert pressure within the family that affects the business. For example, children may resent the time a parent spends in the business. This creates a problem because parents usually develop guilt feelings as a result of their neglect and the resentment expressed by the children. In-laws, on the other hand, are viewed either as outsiders and intruders or as allies and therefore are usually ignored or misunderstood. For example, a daughter-in-law is usually expected to support her husband's efforts in the business without a clear understanding of family or business dynamics. She may contribute to family problems or find herself in the middle of a family struggle. The son-in-law faces similar, if not worse, problems. He may be placed in a competitive situation with his wife's brothers. If he isn't involved in the family business, he can still exert pressure on the business in his role as his wife's confidant.

An Employee but not an Owner - This family member works in the business but does not have an ownership position. For this individual, conflict may arise for a number of reasons.

For example, if he or she compares himself or herself to the family member who has an ownership position but is not an employee, a sense of inequity may result. The member may voice his or her resentment: I'm doing all the work, and they just sit back and get all the profits. Or resentment may occur when decisions are made by owners alone. Here, he or she may feel: I'm working here every day. I know how decisions are going to affect the company. Why didn't they ask me? Family members employed in or associated with a family business generally expect to be treated differently from non-family employees.

An Employee and an Owner - This individual may have the most difficult position. He or she must effectively handle all the actors in both systems. As an owner, he or she is responsible for the well-being and continuance of the business, as well as the daily business operations. He or she must deal with the concerns of both family and non-family employees. Often, the founder, as the sole owner and chief executive, falls in this category.

Not an Employee but an Owner - This group usually consists of siblings and retired relatives. Their major concern usually is the income provided by the business; thus, anything that threatens their security may cause conflict. For example, if the managing owners want to pursue a growth strategy that will consume cash and has an element of risk, they may face resistance from retired relatives who are concerned primarily about dividend payments.

Non-family Members

An Employee but not an Owner - This group deals with the issues of nepotism and coalition building and the effects of family conflicts on daily operations. Owners' concerns for non-owner employees usually involve recruiting and motivating non-family employees and non-family owner-managers who will have little or no opportunity for advancement, accepting children of non-family managers into the business and minimizing political moves that support family members over non-owner employees.

An Employee and an Owner - With the emergence of stock-option plans, this group has become more important. Employees may become owners during a succession. In companies where a successor has been chosen, partial ownership of the company by its employees can foster cooperation with the new management because the employees will personally share the benefits and responsibilities of the company. In cases where there is no successor, selling the company to the employees who have helped build it makes good business sense. Employees who own the company will want to be treated like owners, which may be difficult for family members to understand and accept. A thorough understanding of the behavioral consequences of an employee stock ownership program (ESOP) should be grasped before a family implements such a program. Understanding the perspective of the individuals around you, both family and non-family, will make communicating and decision making easier.

Why do some Business managers reach the profit goal more frequently than others? They do it because they keep their operation
pointed in that direction - management of profit earning. They never drop sight of this goal - to finish the year with a gain.

This manual Gives suggestions which should help an owner-manager to zero in on profit earning. It points out that you must stay
informed, make timely decisions, and take effective action. In effect you must control the activities of your organization instead
of being controlled by them.

Topnotch Functionality in golf, shootingfishing requires understanding, training, and endurance.

Likewise in Small businesses, year-end profit arrives to the owner-manager who strives for topnotch performance. You achieve
profit making goals by understanding your performance, by practicing the art of making timely, balanced judgments and by
controlling the organization's activities.

Adapt the Suggestions in this guide to your situation. They ought to help you predict the shots to maintain your company headed in
the ideal direction - toward profit earning.

First Rule of Profit Making: Know Your Business. The Time-honored truth"Knowledge is power" is especially pertinent to the
owner-manager of a small business. To maintain your business pointed toward gain you need to keep yourself well informed about it.
You have to be aware of how the organization is doing before you may improve its performance. You must understand its weak points
before you may correct them. A number of the information you require you pick up from daily personal monitoring, but records
should be your principal source of advice about gains, costs, and sales.

Know Your Profit. The gain and loss statement (or earnings Statement) prepared frequently each month or each quarter from your
accountant is among the most essential indicators of your business's value and health. You need to be certain that this
announcement contains all the facts you need for evaluating your profit. This statement must pinpoint each earnings and cost area.
By way of example, it should demonstrate the gain and loss for each of your products and product lines in addition to the profit
and loss for your whole operation.

It's a good Idea to have your own profit and loss statement prepared so that it shows each item for the current period, for the
identical period last year, and for your current year-to-date. For example, a P&L statement for the month of November would reveal
expenses and income for the current month, for November this past year, and prices for the eleven months of the current calendar
year. Many businesses publish their annual reports with several previous decades so stockholders can compare earnings.

Comparison is The key to using your P&L statement. If your accountant is not already supplying figures which you can compare, you
should discuss the possibility of having them supplied.

Financial Ratios out of your balance sheet also allow you to understand whether your gain is what it should be. For example, the
ratio of net worth (return on investment ratio) reveals what the company earned on the equity capital invested.

Know Your Costs. An owner-manager ought to understand prices in detail. Following that, you can compare your cost figures as a
proportion of earnings (operating ratio). Be sure your prices are itemized so that you can put your fingers on the ones that seem
to be rising or decreasing according to your expertise and the cost figures of your industry. When prices are itemized, you can
spot the culprit once the overall figure is greater than what you had budgeted. Take advertising costs for example. It's possible
to catch the offender should you split out your advertising expenditures by product lines and by websites. Additionally, a
comprehensive check of question yields from advertisements will help to avoid unsuccessful books.

In understanding your Prices, keep in mind that the formulation for gain is: Profit equals Sales minus Costs.

Know Your Product Markup. Be certain That the pricing of your products supplies a markup adequate to the sort of profit you expect
to attain. You have to keep constantly informed on pricing because you have to adjust for rising costs and at the same time keep
prices competitive. Knowledge about your markup also can help you to run workouts with your eyes open. Continuing to make a
product which just a few customers want is an effective merchandising tool only once you use it on goal - for example, to hold or
attract buyers for additional high markup solutions. Do not hesitate to shed a loser out of online.

Garbage-In, Garbage-Out. An Owner-manager should not fudge the documents. The acronym GIGO the computer industry uses is accurate
with manually kept records as well as with machine-processed ones. When an owner-manager allows"garbage" to enter the records, the
reports will include"garbage." Reports do not need to be extensive but they must be accurate.

Search For Trends. Try to not look at a single month's sales or Profit picture alone. The figures on your working statements are
significant only when you set the picture in the ideal framework - which is, take a look at your characters from the context of
what's happened and what's likely to happen. In that fashion, you catch a downward trend before it gets out of control.

You should also Concern yourself with the figures behind the bucks - for example, the amount Of units sold or the number of
orders. Insist on cost-per-unit figures. The Fluctuation of this cost-per-unit can be more meaningful than just looking At the
dollar figures . Another idea would be to exhibit these comparative Figures on graphs so that important trends can be seen
readily.

custom-clothing custom-jewelry custom-shirt custom-shoe custom-t-shirt-printing custom-wig dairy-farm dance-studio data-center data-entry dealership decal deck-building demolition departmental-store design-studio diagnostic-laboratory diamond-jewelry digital-marketing digital-printing direct-selling disc-jockey-service dispatcher distillery diy dog-breeding dog-grooming dog-kennel dog-training dog-walking dollar-store door driving-school drone dropshipping dry-cleaners drywall dsa dually-truck duck-farm dumpster-rental dump-trailer dump-truck durag earring egg-farm electric-scooter electronics engraving epoxy-countertop