5 important keys to avoid conflict in a family business

Start a business is very difficult, no doubt. However, at the same time, the fact that there are few people initially involved is an advantage. With the passage of time, if the company prospers and other members of the family begin to have impact on the business, there arise difficulties of the family business.

avoid conflict in family business

Here are some important tips to avoid conflict in a family business:

Distribution of profits
Probably one of the most important aspects: establish in written form, clear and detailed how it will be the distribution of profits and dividends of the business. Please do not make the mistake of believing that this can be handled in confidence and through unstructured conversations. Not imagine the amount of families that are broken by economic issues and family businesses are usually great shooters conflicts that destroy entire families.

Therefore, it is best to dedicate a series of meetings to shape a final document, which describes in detail how the system will be profit-sharing among relatives. Will they be distributed equally or more will be given to those who have less? What percentage of profits must reinserted into the business? There is much to detail…

An employee is an employee
Another point that generated a lot of confusion is when family members hold positions as employees of the company, beyond owning their part. I want to be clear on this: an employee is an employee, and two employees with the same responsibility and seniority should have equal pay.

Why do I say this? Because it is normal to observe that family members earn higher wages than others. Big mistake. A business is a business, and order is an important condition if we want to maintain profitability. In any case, the members of the family should benefit from the withdrawal of capital and distributions of profits, but salaries must be maintained as such.

External Agents
When to hire outsiders? It is a delicate point, and each family will determine the ideal time. The advice is that you should be very careful in who is hired, since these agents will always find a way to benefit your business as much as possible above his.

However, in certain situations if necessary an objective view from outside, that see things clearly, or that have greater technical capacity and knowledge that is available among the members of the family.

Communication must flow
Resentment and revenge: you cannot imagine the number of companies that may be destroyed by these feelings. People act more guided by emotions than by reason, so it is crucial to generate a business climate in which to resolve situations before they become a bigger problem.

Promote communication among the family members. Generate a climate in which to constructively criticize without causing bad feelings. I think it’s best to create a space where people feel comfortable to give and receive criticism. In that space is valid to say whatever the other person, and that this one is not going to feel offended.

Avoid the appointment of not capable relatives
Today the market is too competitive. Do not make the mistake of filling company employees who are members of the family, without checking that they are really ready to perform the functions of your office.

To be clear: not bad that members hold positions in the company. Yes it is wrong to put members in positions for which they are unprepared. Remember that in the end it is a business, and if this one does not survive, nobody does it.