According to Darleen Barton, best selling author, coach and mediator, “many people do not realise the dangers of not setting out clear strategies, principles and agreements when starting a business with family or involving family members in the business.”
“In the challenging world of business, working with people you know and trust is an advantage, especially in a family-owned business, however people can fall into the trap of getting comfortable and forgetting the importance of contracts to fall back on. They then find themselves in a difficult position down the track when tensions and problems arise,” Darleen added.
“Many business owners I work with to address and resolve family based disputes and issues find themselves facing stressful situations due to a lack of clear boundaries between personal and business relationships with their business partners or employees who are also family.
“It is a real skill mastering how to separate your personal and work life especially with such familiar people around you, but it has to be done and this is what I encourage clients to take on and incorporate into their businesses.
“Making sure everyone is on the same page from the very beginning by drawing up contracts and agreements for any future conflicts that may occur is highly beneficial to not only the family relationships but also for the success of the business in the future.”
Issues that arise can often lead to domestic disputes between family members. This is something Darleen has seen much of throughout her career and has even been ordered by the court to help with such disputes.
“Situations like this are always difficult to solve peacefully but by putting management and communication strategies in place, they can easily be avoided.
“It can be a difficult choice to take a step towards resolution and mediation for conflict, whether between spouses, family members or in an intense workplace situation,” Darleen added.
“When it comes to family business situations, and any business situation for that matter, what I stress the most is ensuring there are processes in place for open and fair communication to allow you to effectively solve tensions that may arise.
“Many business owners come to me hoping to improve business or workplace relations, with a view to increasing productivity and finding a way to bring employees together for a more cohesive working environment.
“While this is a viable goal, there is much more to it when it comes to working with family. The productivity of the business can’t be addressed until there is a cohesive work environment between the family members and ground rules set in place.
“In the situation where issues have already arisen, it is important that sustainable methods are used to strengthen long-term family relationships. This will bring real change for those involved to avoid the courtroom environment and the failure of a business.
“There are some key issues which arise often in family owned businesses and these include:
- Disputes between family members who set up the business together but disagree with the direction of the business,
- Disputes between family members over spending, allocation of profit, etc
- Tension and problems associated with the involvement of family member partners, girlfriends, adult children – and their partners
- Divorce, separation and claims over all or part of the business and its assets
- Dealing with the long term illness of a partner
“While I help many businesses to address and resolve family issues, I always recommend that a constitution be put in place which outlines parameters and guidelines around the involvement of family members. I also look at whether the business is structured in a way that reduces the risk of claims against the business.
“I recently worked with a business where the owner’s son involved his wife in the long-standing family business and when the son separated from his wife, the wife sought to include half of the business in the settlement.
“Unless businesses are structured well, things can end very badly for a business owner.
“What many people don’t understand is that mediation is one of the most important aspects of business when issues arise.
“My advice to everyone is mediate early. Rather than spend a fortune on lawyers, try and work with the other party to achieve a solution through mediation. Lawyers will then simply be able to assist you to seek ratification of the resolution and if necessary, ratification through the courts.
“This will save a lot of heart ache and a lot of money. But of course, the best advice I can give is to ensure you are well prepared before any issues occur.”