Generational Gaps: How to Deal with Family Business Situations

Brooke Chaplan

August 23, 2013


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Each decade brings with it amazing progress in technology and changes to social norms, and these differences may prove difficult for some families, and family businesses in particular, to handle. Tempers may flare, and issues may develop from generational gaps that exist within a family business. Understanding how to work together and diffuse tense situations helps ensure the survival and growth of a family's livelihood.

Dealing with Communication Differences

Sometimes the patriarch of the family hasn't yet jumped into the digital realm and isn't accustomed to making significant decisions with a keyboard and a computer screen. Younger generations, however, have none of these qualms and will discuss just about anything through email. Clarifying appropriate methods of communication helps reduce misunderstandings and ensure all members of the family business are on the same page. Clear everything in a method of communication everyone can use.

Creating an Actual Business Entity

A small family business that starts out of a garage, or the family kitchen, may turn into a very successful venture for the family, but obtaining legal status as a business with forms from an institution like FindLegalForms.com is important for tax reasons and legal protections. Businesses are treated differently under the law than individuals, and status as a business protects family members against outside issues and family disputes.

Hiring a Third Party

For family businesses where much creativity and change is required to stay ahead of the curve, dealing with the day-to-day issues of running the business can take a lot out of family members. For issues like a retail outlet, shipping activities, and warehouse management, hiring an individual strictly tasked with such responsibilities, reduces stress on family members. Having someone else deal with functional sales details also reduces the chance for the older generation to argue with the younger generation about how such daily responsibilities need to be handled.

Securing the Legal Succession

No one enjoys talking about the time when a family member might need to relinquish control on a business due to age, but understanding how retirement or death might impact a family business is an education best handled early. Teach the family everything they need to know and questions they may have like, what is a living trust, how the business will be passed on, and the tax issues therein ensure the company's survival through any type of change in ownership or control.

A family business often becomes vital to the financial health and welfare of many people, and treating the venture as any other business with all necessary legal and monetary ramifications, ensures the best protection for the family's investment. Arguments will always happen between family members, but honest communication and healthy legal protections offer a business incredible chance for success.