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The Hazards of a Family Business

The Hazards of a Family Business. Professor Amtmann. Many Entrepreneurs need help starting their business. Financial help Manpower help Expertise Networking. Where is the most logical place to find help?. Your family In most cases they love you and want to support you

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The Hazards of a Family Business

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  1. The Hazards of a Family Business Professor Amtmann

  2. Many Entrepreneurs need help starting their business • Financial help • Manpower help • Expertise • Networking

  3. Where is the most logical place to find help? • Your family • In most cases they love you and want to support you • Will they provide rational advice? • Even though they are willing to provide funding can they afford it? • Are you risking your parents’ retirement? • Do you have siblings and will it cause friction with them? • “Mom and Dad always liked you best” • No matter what your age, you are always your parents’ little girl or boy!

  4. When things go well • It will be very rewarding to the whole family • They will be very proud of you • They will be proud to share your success

  5. When things don’t go well • Can you fire your mother or brother? • If you borrowed money and it is lost can you repay it? • Every entrepreneur must have a tolerance for risk • Does your family have that same tolerance for risk?

  6. Multigenerational Businesses • If your parents own their own business • Who takes over when they retire? • Are there multiple family members vying for the business ownership? • Is there a succession plan? • Does everybody understand it? • Is it in writing? • I thought Mom and Dad always wanted me to run the business when they retired • I have worked there all my life • I have worked harder than you • You went off to university and I kept the business running

  7. What is the business culture? • Are there employees? • What are their expectations? • Did you earn your position? • Did you come in at the bottom and work your way up? • Did you just come in at the top because you are the son or daughter? • Do you have the necessary expertise to run it? • Do they trust you? • Do you really want to run the company? • Some children worked in the family business from early childhood and want nothing to do with the business when they grow up

  8. Are there other non-family partners? • Is there a buy sell agreement? • Exiting the business is often the last thing people think about as they start a business! • Can you afford to buy out a partner without loading the company with unsupportable debt? • Businesses all start out small • When they are successful • They may not be able to support either being divided effectively or there may not be a market or ready buyer for them

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