Business Partnership Advisor
Together, we can fix your business and partnership problems
Chris Reich, Business Luminary
How to Fix Problems in a Family Business Partnership
Email of the week:
Chris, I have a business with my Dad. We have been in business for 8 years and the business is doing very well. Lately, we have been having some serious arguments over business decisions. He also doesn’t believe in any discipline when it comes to employees. How do I approach this?
I deal with family business problems all the time. Frankly, they are by far the hardest to resolve. When it seems like it will be easy, it’s hard. When a situation looks impossible, it will often come together easily. It’s very hard to predict the outcome when I start mediating a family business problem. There is one big clue that is highly predictive of a successful resolution and it rests in the answer to this question: Are the parties to the dispute willing to put family ahead of personal feelings?
Already in a Tense Situation with a Family Member?
It can be very hard to let go of decisions that you cannot agree with. Telling you to put family first is easy for me to say but if Dad’s decisions are hurting the business?
The other big issue that always comes up is around managing employees. Often there is a “good cop” and “bad cop” approach. One says it’s time to talk with the employee who is always late and the other says that it’s nothing to worry about. Disagreements over employee problems can do a lot of damage. Employees learn to manipulate the situation to their advantage. Then what?
If things are getting tense between partners in a family business, do not wait until it gets bad, call in a third party. It shouldn’t be another relative, that can make things worse. Get someone who can help with guided meetings.
Is there tension in your family business partnership? Act before it gets serious.
Chris Reich, Business Mediation Services
We Don’t Need a Mediator, But We Need Something
I understand. The term “mediator” conjures up a picture of some big conflict where two sides present a case and a person in a dark suit makes a ruling. I dislike that image. My preference is to be seen as a “moderator” of business. When we sit for a meeting, in person or using video conference, I conduct the meeting by introducing the topics and helping all parties learn how to talk things through without getting personal.
It’s an educational process more than a mediation. I’m always impressed by the excellent thinking that comes from two people who begin to work together after being in conflict. It’s hard to separate the business choices from the family history and that’s why having a moderator guide a few meetings is so effective. It works and it’s cheap when you consider the cost of continued tension in the partnership.
The 5 Steps to Fixing a Family Business Partnership Problem
- Talk with your business partner like a business partner. It doesn’t matter if it’s your mother, uncle, brother, or sister; talk like business partners.
- Come to agreement that there is a business problem and that you both (or all) want to fix it.
- Get a dispassionate, neutral party who knows business to facilitate structured meetings.
- Draft resolutions from your meetings and agree to stick with the resolutions you adopt.
- Agree to have regular, structured meetings at least once a week.
Structured meetings solve most problems. Generally, people do not want to sit down and talk when there is tension. But business needs to be treated separately from past baggage or personal issues. I try to steer clear of turning business meetings into therapy sessions in spite of partners trying to drag me into that territory. A structured meeting means that you:
- Set a time for the meeting in advance (not just, “we need to talk now!”)
- Show up on time
- Have no commitments that will close the meeting early (“I have an appointment with a customer and need to go.” You must show your partner that she is as important as anything else in the business including customers.)
- Have an agenda (Agree in advance on 3-4 items to discuss and stick to those items)
- Plan to meet for 1 to 1 1/2 hours. (Better to meet more often than to have long meetings)
Remember Where We Started?
I said that if people can put family first, it’s a clue to the potential outcome. That doesn’t mean agreeing to everything in order to get along. Not at all. It means having the heart to say, “Dad, is there something bothering you about the way I manage people?” It takes character and courage to say, “I want to hear you.” When I see that, I know it can work out. When I hear, “you’re my brother and I love you…but” then I know it’s going to be tough. Learning to listen is more important than learning to persuade.
Get a Moderator
If there is tension in your family business partnership, get a moderator to help you with structured meetings. Unless the relationship is dysfunctional, a moderator can help you get to a much better place.
And if the relationship is dysfunctional? I see a lot of seriously sick relationships. In those cases, the best course is to dissolve the partnership.
Let’s look at how to plan for the next generation of your family to run your business. It’s never too early to make a succession plan and the earlier you start, the more options you have.
How do I get out of my partnership? And, it’s the biggest reason I am always ranting about having a Partnership Agreement. Without a Partnership Agreement, your options are very limited. You accept anything your partner is willing to give you, or you can dissolve the business.
Somebody puts up money with someone who agrees to contribute labor as their contribution to an equal Partnership. Once things are set up, and a lot of money is spent, the other Partner fails to perform, and the troubles begin. I get 2-3 calls like this every week.
Partners take advantage of partners every day and they get away with it. It is the most painful call I get. It sounds like this, “I put all the money I had into starting our business. My partner had bad credit and no money, but he promised to do all the work to get the business going.