When to split the business?

Posted on: September 13th, 2011 by Richard Cressman

My question for Richard

My brother and I are in our late 40s and have been farming together in a partnership for 23 years. We get along great and have created a fairly large business throughout these years. Each of us has two sons who are starting to get involved in the business. We have noticed that the cousins got along fairly well. However my oldest nephew just married and things are not quite the same anymore.

If we split the business it is going to impact profitability, but we are wondering if it may help the family relationship stuff. How do we move forward?

 

Richard’s Reply

First of all you need to be congratulated on being able to work successfully with your brother for over 20 years. You obviously have developed working habits that have served you very well regarding the interpersonal relationship issues which has translated into a profitable business.

Your observation about the cousins working together and the slight change in how they get along with each other since the first one got married is normal. Every time a new individual comes into what I refer to as, “the circle of influence” in a family business there are bound to be some changes. In this case the young woman brings her ideas to the marriage which frequently will have a ripple effect out through her husband. This is not necessarily good or bad, it just is what happens. The same thing probably happened when you and your brother got married as well.

If you can create two financial entities out of the one, this probably has the greatest potential to keep these four young men in the farming industry. The experience that you and your brother have gained from working together puts both of you into a great position to coach and mentor the next generation.

It’s interesting that each of you have two sons so that you will be able to virtually replicate with them the same opportunities that you had with your brother. Another plus that you have going for you is that even as you go into this possible division of the business you can model for your children how to effectively deal with potential conflicts and still remain friends. It is also important to convey to your two sons and your unmarried nephew, that if there are elements of conflict starting to develop amongst the younger generation that the blame should never be put on the young woman who has married into the family. As mentioned above, every time a new person comes into the picture the dynamic changes because others are changing and evolving as well.

Congratulations on being so astute in recognizing the family issues and being proactive in your planning.


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