Resource Center

Family Business Issues and some Tools to Help - Theory vs Real World

Universities are studying “the family business”. Fairleigh Dickinson University, in New Jersey, established the O. Berk Company Family Business Forum in 1992, to support local family businesses with breakfast presentations for members, covering such topics as “ Emotional Intelligence and Resolving Conflict”. The focus is on exchange of ideas in a small group (20-25 member businesses), through regular meetings and personal connections, modeled much like a large family. The Forum lists a number of concerns, not usually encountered by non-family businesses:

  • Selecting and preparing successors
  • Planning for estate taxes and ownership transfer
  • Fostering open and productive communications
  • Managing conflict within the family and business

[view.fdu.edu]

Theoretically, outside resources, like the Forum at Fairleigh Dickinson University, should make it easy to run a family business, rocket to the top of the heap and flourish, even in an impaired economy. After all, higher education is researching the elements of running a successful family business. However, academic studies are not so valuable outside academia. For example, a first-generation owner of a business that makes delivery stops along routes in a large area may be confronted by a second-generation manager, who wants to add route optimization software to the business for vehicle route planning, over the objection of the owner. In the academic world, this is described as part of the communication issue, or the transition of power issue. In the real world, however, this conflict, along with other obstacles to the success of a family-owned and operated business, should be described in real world terms as below:

  • Selecting and preparing successors: When Grandfather ran the company, women were secretaries. Now who gets to make a difference in management—Son who follows exactly in his father's business model footsteps or Granddaughter, who has an M.B.A. From Harvard?
  • Planning for estate taxes and ownership transfer: Taxes will always be with us, but owners can give titles with no authority.
  • Fostering open and productive communications: When family members divorce and ex-spouses are still in the business—then what?
  • Managing conflict within the family and business: Conflict can be small, such as a difference in opinion about a project or large, such as an owner's refusal to embrace important technology, such as route planning software, for fear of insulting fleet drivers, who have been relying on their memories for years.

The first step to solving the problems of a family business is to describe them in real world terms.