Business Strategy Consulting
FAMILY-OWNED BUSINESSES
A business ends when the owner sets fire to it. A sports team is sold out of the family in order to pay estate taxes. Father and son can’t work together. Son leaves and becomes dad’s main competitor. Any of this sound familiar? Scenarios like this happen all too often.
| CAUSES OF FAILURE |
| Cash Flow Shortages for
|
–start-up
–growth –operating expenses –retirement –estate taxes –your lifestyle –medical expenses |
| Inadequate Estate Planning
|
–unwillingness to face mortality and the reality of estate taxes
–belief that fair means equal –unfinished and uncoordinated legal and financial planning –unorganized, messy and unprotected or unsigned documents –distrust of insurance agents |
| Management Succession Problems
|
–absence of vision or failure to communicate that vision
–paying people what they need, not what they’re worth –failure to appoint a successor –inadequate training of successors –gender and age prejudice –differing values between generations, especially related to –work ethic –one-person show as principal management style |
| Personal Issues
|
–belief that disability will never happen to me or mine
–addiction — to drugs, alcohol, work –obsession with control –resistance to change –lack of attention to personal health –greed –dangerous hobbies |
| Family Behavior Patterns
|
–shoving conflict under the rug
–meddling in the business when it’s not your job –unethical and/or illegal behavior –belief that only “sick” families seek therapy –pretending you’ve talked about hidden agendas –petty arguments about who did what, when, and to whom –trying to maintain harmony at all costs –secrecy — the family doesn’t have a clue what’s going on –talking about business at every meal |
| Transfer of Ownership Landmines
|
–no buy-sell agreement
–by-sell agreements with no price or valuation formula specified –no way to fund buy-sell agreements –inability of family member to manage assets –belief that fair means equal ownership among heirs –secrecy — when it keeps stakeholders –uninformed |
| Business Practices
|
–lack of attention to business
–employees stealing you blind –keeping unproductive people on the payroll –tunnel vision — absence of checks and –balances –unwillingness to diversify for fear of –violating the original –vision |