Tough Economic Times Put Family

Recently, a good friend confided in me that she's been waking up in the middle of the night worried about the economy and its effect on her family and business. She's not alone. Business-owning families across the country are concerned about the impact of oil prices and the impending economic slowdown. For many, the demands and tensions of tough economic times highlight even more clearly the need for trust and open communication between family members. These demands and tensions also emphasize the need for economic discipline, clear policies, and well-established systems of family and business governance. Over the last 15 years of economic prosperity, the financial success of many family businesses has spawned a number of bad habits. A recent meeting I had with a client led to a discussion of the economic outlook in his industry-rising fuel costs together with a more competitive landscape have led to a shrinking bottom line. The natural tendency in tough economic times is to cut costs and consider letting some employees go. Upon further discussion with my client, it became clear that the family members around the table in management positions were reacting to the pressures without a clear understanding of the true cause of their financial troubles or the likely financial impact of their decisions. I asked the founder of the business how he ran the business seven years ago, when it was growing rapidly. As expected, I heard that there were regular weekly meetings that included a review of the financials and in-depth analysis of revenue and cost trends, and a comparison to a budget. My client admitted that as the business grew and profitability exploded, the budget process became less disciplined. Weekly meetings became monthly meetings and then disappeared altogether. Further discussion also revealed that family tensions were ignored as the business grew and bank accounts expanded. Suppression of family conflict did not resolve it, but only made it more deep seated. This lack of financial discipline combined with increasing tension in the family and a shrinking bottom line were leading to real challenge. Beyond economic discipline, families must have the discipline to stick to their policies and succession plans. Families can avoid creating additional tension at an already challenging time by enforcing discipline in all areas of family business planning. sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 sa-baccarat168 4. Honor the succession plan. A father or grandfather who has turned management of the business over to members of the next generation is often tempted to jump back into action during tough times. The family may welcome and encourage their involvement because of Dad's or Grandpa's history of success under pressure. Will the family allow the current leadership to lead or will there be too much fear for the family to place its trust in the next generation's leaders? An "either/or" solution is not the answer. Finding a way to access the wisdom of the senior generation without cutting off the junior generation at its knees will be imperative. Combining the wisdom of the past with the talents of the present will be the key to success in these tough times. A family's response to these economic times could be seen as a test of will and commitment. A family shareholder group that has worked hard to establish policies and governance systems will certainly be led to question the wisdom of those policies, which were likely created during times of peace, calm, and even prosperity. Will the family stick with its policies, even if individual or collective suffering results in the short term? What will take precedence-the needs of the business, or the needs of the brother who requires his dividends for a mortgage payment or the sister whose daughter needs a job? All systems will begin to fray or fracture at their weakest point, when the going gets rough and pressure starts to build. A family system is no different. Many family businesses are seeing and feeling more than a few cracks starting to emerge in response to today's increased economic pressure. By returning to the tried and true-strong governance, agreed-upon policies, family education-families can use the challenges of these tough times to become even stronger and more unified. This article is designed to provide general information and is not intended to provide specific legal, accounting, tax or other professional advice. Since your individual situation may present special circumstances or complexities not addressed in this article and laws and regulations may change, you should consult your professional advisors for assistance with respect to any matter discussed in this article. Family Business Consulting Group®, its editors and contributors shall have no responsibility for any actions or inactions made in reliance upon information contained in this article. Articles are based on experience on real family businesses. However, names and other identifying characteristics may be changed to protect privacy. A senior associate of The Family Business Consulting Group, Dr. Green is the former director of the Austin Family Business Program, and was founding Director of the Austin Entrepreneurship Program, at the College of Business at Oregon State University. Mark is an active educator, speaker, researcher and advisor on succession, family business governance, entrepreneurship and professionalization of the family business. He consults, speaks and leads academic courses, executive education programs, workshops and seminars for family businesses and the professionals that serve family enterprises. He is regularly quoted by the news media such as the Wall Street Journal, The Oregonian, and The Denver Post regarding family business issues. He was co-founder of the Family Enterprise Research Conference with Pramodita Sharma that was hosted in Portland, Oregon in 2005 and served as chair of the Educator and Research Conference for Family Firm Institute in 2005.