Is your inward emphasis on family hurting the family business?

All too often, family problems become business problems. This is particularly true when the entrepreneurial owner adopts an inward focus and sacrifices fundamental business principles for immediate benefit of the family.

The following conditions may serve as warning signals for you to consider alternative strategies to maintain unity between family and business issues.

You don't have a succession plan in place

If you don't have a formal succession plan, today is the best time to begin structuring one. Prepare your family and key employees for the inevitable leadership change by cultivating your vision for the business. It may be one thing to name a successor and quite another to turn over the reins. You must conduct some honest soul searching and carefully plan how you will communicate your vision and win family support for the transition. Significant stock owned by family members not active in the business. Outside shareholders usually want dividends; insiders draw salaries and perks. You can see the potential conflict. If possible, don't leave stock to children who are not in the business. You can treat them equally through other compensatory & estate planning methods. The younger generation needs formal training in making money. Being a family member doesn't mean that one can successfully operate a business. It may take more than just working there. Potential business leaders need good formal training and practical experience. Whatever educational route your child takes, make sure he or she receives good training in running a business and making money.

Every family member gets a job

You are courting trouble if the family business has become the "employer of last resort." Establish objective rules of entry into the business, a formal job description and performance evaluation procedures. If possible, arrange for non-family employees to train and guide family members. Regarding compensation, family businesses tend to overpay or underpay members. Adopt fair compensation guidelines that reflect the real market.

Conflicting family and business goals

Know the difference. Don't sacrifice good business sense to accommodate your own unrealistic expectations or feelings about a family member's performance, abilities, attitude or future with the business. You must learn to objectively analyze circumstances (or put in place a board with non-family consultants mixed in) to make decisions that ensure the ongoing health of your company. This commitment will help you keep an outward perspective and face organizational and market realities. Both your family and business will benefit in the long run.

This article was contributed by the Texas Family Business Association.