Effectively Managing a Family Business
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The board of directors for any company is going to face some challenges. But when dealing with a family-owned company, those challenges can be magnified to some degree. Issues can arise as far as CEO succession, compensation and simply conflicts of interest. The key is to face matters that do arise head-on; avoiding and ignoring any problems can potentially make the situation explosive. It takes balance, communication and a finely developed set of interpersonal skills to make things work within a family-owned business sometimes.
Choosing a successor can be one of the trickiest tasks for a board of a family run business. The board needs to listen patiently; they also to some degree need to be armchair psychologists, taking into consideration the various leaders/family members' desires, fears, and anxieties. Sometimes the best course of action is to choose an outsider to become the next CEO. In doing so, however, the board has to take steps to ensure the comfort levels of the family members. They have to be confident about the choice and consequently stand behind the new CEO. In the end, the board needs to avoid bias and select a candidate that is the best fit for the company.
The next generation in a family-run business can be a tricky issue. Sometimes the younger family members do want to be a vital part of the company, whereas, at other times, they simply want out. For many younger members, the business is a source of income and wealth versus an actual company that needs to be tended to and developed. One critical thing is to establish expectations and rules. How will the next generation enter the business? What will be the norms therein? Doing this well before the younger members are adults can help forego numerous problems down the road.
If you have a family business and need financial help to weather a slower period or if you have a major project in mind, First Union Lending can certainly help. Our business loan programs are fast and flexible. Call today!