Tips for Avoiding Conflict in Family-Run Businesses

Conflict is often a part of life in Los Angeles businesses, both family run and not. Of course, when family gets involved things can get thornier, especially if the family run business doesn’t follow a formal management structure that includes a formal employment policy. So instead of going with an informal management style that potentially inhibits the growth and profitability of the business, speak with an experienced Los Angeles business lawyer about smartly structuring your family business. By understanding the family dynamics, the right lawyer can act as a mediatory, negotiator, and devise productive resolutions.

If you are experiencing struggles with your family run business, consider following these easy tips.

1. Keep the payroll to those family members who are actually working for or contributing to the business. Clearly identify everyone’s roles and responsibilities. Establish each family member’s title, job function, and compensation. Most importantly, make sure that you have performance reviews for family and non-family employees alike.

2. Avoid special treatment. Be careful not to create two classes of employees: family members and non-family members. In a business of any size, favors given to family members and friends de-motivate employees and set a bad example.

3. Be careful not to abuse family relationships. Put simply: don’t reward or punish someone because they are a relative with whom you share a personal history.

4. Be frank. Don’t keep the fact that you have family members working at the family business a secret — it will eventually come out. Communicate honestly and openly. Let all employees know that family members and non-family members alike receive the same treatment, and then show them.

5. Keep family decisions and business decisions separate.  As a savvy Los Angeles business lawyer would suggest, business owners might want to avoid allowing family members borrow company vehicles or take advantage of other ‘perks.’ Also think twice before passing off personal expenses, such as family vacations, as business expenditures.

6. Establish healthy boundaries between family and business. Boundaries are always a good idea. Whether you are running a business with your significant other, child, or great uncle, you must agree and adhere to some kind of system, such as leaving work at work.

These are just a few tips to help you and your family run business succeed. For more guidance on how to deal with specific family business issues, or to prevent them altogether, reach out to a skilled family business attorney in Los Angeles.

To professionally and efficiently run your family business and to address any potential disputes, reach out to the skilled business formation attorneys at Hart, Watters and Carter today.


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