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Preventing family business disputes

The family business plan is well underway, all important deadlines have been met and suddenly, an unexpected challenge lies ahead: a business dispute. These tricky situations happen more than the average Chicago or Detroit business owner might suspect. What are some typical disputes that can arise and how do families go about solving them? 

The American Bar Association acknowledges that family-run businesses serve a crucial role in today’s economy. Because of their importance across the nation, a strong system is often necessary to help find solutions to the conflicts that can present themselves unexpectedly. Pointing out that family businesses are often extensions of family relationships, the ABA explains that this characteristic can come with both a blessing and a curse; while families may align on some topics, they may experience discord when it comes to others. Sometimes, traditional ties — such as one member’s choice of religion — overlap with business affiliations, forming disputes that can be deeply rooted in emotions. In a similar vein, inheritance and divorce can also play a major role in the way a family’s business operates. Of course, as with all business partnerships, contract disagreements are another common point of contention. 

Running a business centered around family can indeed be an enjoyable and rewarding experience. Inc. magazine shares tips on how to keep the family business disputes to a minimum and even ways to rule them out altogether. Echoing the aforementioned warnings of mixing personal and business affairs, Inc. notes that many disputes occur when families do not follow an appropriate business structure. Some experts go as far as to categorize the problems that most often take place in family business disputes:

  • Family issues
  • Business issues
  • Ownership issues

Any overlapping of the above three affairs could create issues, as Inc. continues by advising readers to keep any family members who do not work with the business off the payroll. Communication can also go a long way when it comes to business disputes. Again, Inc. warns that muddying the waters with family and business affairs can result in furthered arguments in the long run. Each situation may be different from the next, but sticking to a structure can help make a problem more manageable.