In business where owners are related or are personal friends, or have helped grow or manage it, the challenge is to assure that those relationships continue over time to be assets to the business; too often, that's not the case. In the context of family-owned and closely-held, failure results from unexpressed expectations and personal comparisons among the parties that negatively impact the long-term success of the business. If the close relationships are not acknowledged and managed with respect and careful, persistent communications, that failure creates a huge negative impact on the value of the business, often causing failure of the business and a resulting windfall to the lawyers.
HERE ARE SOME WAYS I CAN HELP YOU DISPUTE-PROOF YOUR BUSINESS:
- First, it is important for both investor-owners and employee-owners to have written job descriptions for the employee-owners and for the participants and to regularly evaluate and record job performance. (Most people think job descriptions and evaluation is totally unnecessary, but this process has huge benefits.)
- Second, it is vitally important for all owners to agree on the value of the Company from the start, and to do that in a written agreement. That begins with help from your lawyer, your accountant and when the numbers are large enough, a business valuation expert. The valuation agreement needs to be reviewed, at a minimum annually, updated every two years, and the value signed off by all the owners.
THAT'S IT! I've got a lot more, but right now, there's not enough room and you don't have enough time. If you want to hear my horror stories about the costly failures to follow these recommendations and some success stories if you follow my advice, call me or check my blog from time to time, and I'll tell you stories.