Often within a family business it is inevitable that husband and wives will work together, this can be a cause of conflict or an advantage. Below is an article published in Australian Bus & Coach as part of my regular contribution where I reviewed the foundations for how successful family businesses can be run together by spouses . David Harland – One of Australias leading experts in the Family Business Sector
It is not uncommon to see spouses working together within a multi-generational family business. For those willing to take the plunge together, working with one’s spouse has obvious appeal: joint effort towards financial success, a potentially lower tax bill, better ability for tax planning, executive meetings around the kitchen table, and best of all perhaps, more time spent together. However, the challenges of added marital stress and financial risk can make working together a risky proposition that shouldn’t be undertaken lightly.
According to the current Australian Family & Private Business Survey, more than 35% of family members employed by family businesses are spouses, more than any other kind of relative. In our family business advisory practice we have seen many of the challenges and common pitfalls that family businesses and copreneurs – a name given to spouses in business together – can run into; As with so many things, communication and planning are critical to keeping both business and marriage on an even keel, but there are a few common issues that should be addressed at the outset.
I have spoken to three couples recently who work together within their family businesses and they have shared how they have managed this scenario. Rae-Lee Fleming is a 3rd generation owner of Bundaberg Brewed Drinks. She and her husband John made the most of a unique opportunity to commence working together in the family business in 1996. According to Rae-Lee it opened up a “whole new way of thinking, the ability to work together towards a common goal” and that goal benefitted their business as well as their marriage.
Another couple who represent the 1st generation of a successful Qld Construction Company and have recently welcomed the 2nd generation into their family business believe the shared passion for the business is of greatest benefit for them. They have been careful to establish roles and a chain of communication in which they are able to work in their area of specialisation independently thereby avoiding potential conflict.
The 3rd couple are also first generation and are passionate about the potential legacy their family business can create. Working within the business consultancy industry they believe the most essential step in creating a successful working relationship is the clear and ongoing definition of professional and personal roles. All 3 couples agree, answering to a spouse is a recipe for disaster in both a business and personal sense. They believe equality of roles should be encouraged where possible although from an adviser’s perspective, not all organisational structures can accommodate this so ongoing communication and guidelines are essential.
Rae-Lee Fleming’s husband John has in recent years risen through the ranks of Bundaberg Brewed Drinks to become the current Managing Director. Rae-Lee, at that point made the difficult decision to step aside from the day-to-day running of the business as she realised answering to John in that role would neither benefit the family nor the business. Equality of roles had always been essential to them but at this point they agreed the business needed to recognise and benefit from John’s business strengths.
All three couples agree that working together in the family business is an ongoing learning curve. It is often too much to ask that business topics be kept out of the family home, but it is essential to make an effort to carve out couple and family time where business talk is forbidden. Although there was agreement among the couples that common goals are an advantage it can also be suffocating if some level of independence is not achieved.
A solid marital relationship prior to working together was also a pre-requisite for all three couples-working together doesn’t make it easier. Only one suggested that, although they were very comfortable with their situation, a working spousal relationship should be avoided where possible.
From an advisers perspective there are also some important issues to consider before joining the common family business- consider carefully the tax issues of working jointly in a family business. Issues like tax deductions for a working spouse, super savings, and tax-effective family income are beyond the scope of this article, but need to be discussed with a tax expert. Be wary of naming both spouses as directors of a business as separately-held assets (such as a family home) could be vulnerable to creditors in the event of business troubles. Develop an exit plan for one or both spouses. Knowing that there is a plan in place can relieve some of the pressure on family businesses. Though hard to contemplate, the breakdown of a marriage is always a possibility, and should be considered when formalizing a working relationship.