Helping your family and business through challenging economic times
Financial challenges make it harder for the leaders of a family business to choose between rational business goals and compromises designed to resolve a family’s emotional conflicts and financial needs. If these challenges occur after generations of success, the leaders’ dilemma is complicated by the guilt, blame, disappointment and fear often uniquely present in a family business (e.g., “How could you fail after Grandpa built this great business?” or “My son spent his life preparing to run this division; how could you outsource it?” or “I can’t pay the mortgage on my house if you insist on reducing our annual dividend”).
And, of course, making the wrong decisions can cripple the wealth and well-being of the family for generations.
In these situations, making the right choices is far easier said than done.
There is no one-size-fits-all formula for finding the right path. In fact, often there are no solutions, only the opportunity to avoid making a bad situation worse. Many businesses must decide among several bad alternatives — e.g., investing more family finances into the money-losing business or making payments that benefit the family in the short run but result in years of lawsuits from former creditors.
The only comfort to those involved in such precarious situations is that several valuable principles can serve as guides.