When family businesses are what should bring families closer together in wealth, unfortunately, they seem to be causing chaos and ugly feuds.
Ever heard of those families that come from a steady stream of generational wealth? Yeah, those. Most of them have gotten to where they are because of running successful family businesses. The business becomes sort of like a hand-me-down; the dad starts it, then it’s handed over to the son, who passes it on to his son, you catch the drift.
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Family businesses are good. They are like a family’s investment both short-term and long-term. However, sometimes running a family business brings its fair share of headaches.
- Family conflict
With families, there is always drama. Now imagine what it is like when a business is involved. These conflicts stem from a myriad of reasons and some of them are as petty as they come.
- Entitlement issues
Here’s the thing. Your aunt Martha is always withdrawing funds from the business’s account. You ask why; because she is family and since it is a family business, why not? Many family businesses have hit rock bottom because of relatives think they have all rights to the finances and profits. These little withdrawals at the expense of being family lead the business down the drain.
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- Need to favor
A downside to running a family business is that your family will expect that you will employ all the unemployed bunch. Skills and qualifications should supposedly be thrown out the window, why, because you are family! This causes risk eventually because your business is not profiting but you cannot risk firing the staff due to your relationship with them.
- The succession headache
A family business is like cheesecake, everyone wants a piece! There is so much pressure on who is the best candidate to run the business after retirement. One wrong move could have all your family members at your throat and oh boy! That is not good for business.
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Ultimately, family businesses are great. Something future generations can look to. However, for them to run and operate successfully, there needs to be planning and a lot of discernment. Otherwise, get ready for some serious tug-of-war.