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When Business Becomes Personal

by Norris Law Group on December 23, 2013

All businesses face challenges—and family business are no different. One major difference in family businesses may be that very close, personal relationships are likely involved, and this can impact the business significantly—especially when things go awry, as examined in a 2013 article in The Guardian.

Jeremy Shulman, founder and senior partner at Shulmans LLP, a law firm based in Leeds, England is quoted: “Serious problems relating to family business ownership tend to be less common when the firm is first-generation owned and managed. Problems often arise when second-generation family members enter the business or when ownership needs to be transferred.”

Shulman says that a lot of problems in family businesses may be personality-driven. For example, family and non-family members involved in a business may resent it if the owner brings in a child as a “first step” to taking over the business one day. Wage discrepancies packets and having to defer to more senior (or less senior) family members also lead to bitterness.

If relationships at home go downhill, it can have enormous implications for family businesses. According to Shulman, “Many…firms are husband-and-wife-owned. Married couples start the business together and some become highly successful. Yet marriages, like businesses, can run into serious difficulties. Sometimes it leads to divorce between two people who no longer want to work together, which creates a serious issue, of course.”

Shulman says that family members can turn to mediation services to resolve disputes: “Sometimes involving others enables problems to be talked through without tempers getting frayed. As a result resolution might be reached more swiftly and amicably.”

Shulman opines that the best way to avoid conflicts in family businesses is to seek legal advice “at the beginning and at appropriate stages of its development.” Any questions about how the business is to be run can be eliminated by simply coming to clear agreements (preferably in writing) among all parties concerned.  Even if you didn’t take this step upon founding your business, Shulman says that it is never too late to set up such agreements.

Succession planning is also a major consideration for family businesses. Legal advice can eliminate conflict here as well.  Shulman says, “When you ask about succession, you’d be surprised at how many owners haven’t given it a moment’s thought. Often they’re caught up in running the business or think they don’t have focus on it yet – while some struggle with the very idea of letting go of the reins. But in family businesses it’s often easier to plan succession, because ownership stays within the family.”

In short, obtaining the help of experienced legal counsel can help keep your family business—and your family—running smoothly for years to come.

Attorney Graham Norris and his associates at the Norris Law Group serve the residents of Utah County and throughout Utah in the area of divorce. Contact them today at 801-932-1238 or online for a free consultation.

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