In this issue
“I was never ruined but twice: once when I lost a lawsuit and once when I won one.” —Voltaire
All healthy organizations have to deal with conflict, and a family business is no exception. In the typical first-generation company, the founder resolves disputes by fiat and acts as judge, jury, and enforcer. As the business expands and moves into the second generation, relationships among family members become more complex and new mechanisms are needed to handle the inevitable disagreements. Too often, when the founder is no longer around, family conflict ends up in court.
Recently I read about a young man in Michigan who had informed his father that he was not interested in taking over the family business. The son had gone to work with a major accounting firm after earning his MBA and had turned down previous offers to join the family firm. This time the 29-year-old son finally replied: “Dad, Trans-Matic Manufacturing is your dream. It’s not mine.”
Owners of family businesses tend to focus much of their time and energy on just that—running a successful business. There are, however, strong pressures on families to properly invest their capital and asset base. Given the vagaries of business cycles, many times families see greater returns from the management of their assets than from their businesses.
In startup companies of a generation ago, the husband would be in charge of making the product. He, or perhaps his brother, would go out and sell it. The wife would keep the books. She might continue in this occupation until the business expanded enough to hire a professional, or the kids started to be born, or both. The wife would then have a lifetime of child-raising and housekeeping to look forward to, while her husband tended the business.