Even the happiest and most successful family business can benefit by planning for the possibility of conflict.  Following are some tips that may help ensure everyone remains on speaking terms.


Every family member should know which business decisions are being made and what the successes and failures are.  Make sure that all owners have a voice and everyone is clear about the agreed-upon strategies and tactics that will lead the company.

Clear compensation.                    

Be specific and predictable when it comes to compensation and bonuses.  Avoid complicated formulas and be clear about decisions on paying dividends versus retaining money in the business.  While it may seem superfluous, be sure you have written policies regarding distributions and income tax liability.


Pick the best owners to control the business, but also leave all owners a future way out with a buy-sell agreement.  Differentiate between those who work in the business and those who don’t and make succession clear.  Don’t leave the next generation to deal with an ownership stalemate or a weak management regime.

Separate personal and business.

Don’t let family members use the business as a personal bank.  In other words, no loans, credit cards for personal expenses, or personal travel at the company’s expense.  While it may seem natural and convenient in a family business, mixing personal and business spending can spell disaster and spark disagreements that can make your lawyer’s head spin.

Even the happiest and most successful family business can benefit from the proper planning for the possibility of conflict.  With a little work and consideration beforehand, you can decrease the chances of damaging family arguments.

Davis & Hodgdon Associates entrepreneurial advisory services include assistance with buy-sell agreements, succession planning and many of the other tools required to keep your family business friendly.  For more information call 802-878-1963 or visit

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