face-off / buzz ::
ONE QUESTION, TWO MEMBERS
GRANT T. HOLLOWAY, CPM, ARM
APARTMENT MART OF SPRINGFIELD
SPRINGFIELD, ILL. “DO YOU FEEL THAT BUSINESS AND FAMILY CAN MIX SUCCESSFULLY?”
JULIE L. MUIR, CPM
REAL ESTATE BROKER, SENIOR
Absolutely, but it takes three components from all family members involved to make it work: patience, compromise and courage. For every Hefner, Trump or Murdoch
partnership that has soared, there are many more that
don’t make it big, if at all.
Patience is the first key. I work with my father and
neither one of us has an explosive temper. We disagree
from time to time, but it’s a respectful disagreement—no
harsh words or resentment is held.
Compromise. You have to check your ego at the door.
Sometimes your family member is your equal partner
and sometimes you work for a family member. Respect
is everything. If it’s the latter, then you have to realize that your family member hired you because they
thought you could do the job first and foremost—your
last name is unimportant. If both parties have a different idea on what should be done, compromise must be
reached just like in any other business. In my situation,
I respect my father for starting the business that we are
in and realize that I have a lot to learn. If I came into the
business with the ego and swagger of a rock star, this
would have been exponentially more difficult and possibly fatal to the business.
Courage is key. Working with family is not always
easy. There can either be pressures to over-perform to
live up to your family name, or you can be easily seen as
lazy, as if everything was just handed to you. You have to
look those negative influences dead-on and do the job
and do it well. Many family businesses fail not because
of market or macro environmental forces, but due to
family and management issues. If you can utilize those
three keys then your family business can thrive.
There are immeasurable benefits to families pooling
their wealth to purchase a bigger or better asset. That
pool carries a stronger weight with potential lenders,
coupled with smaller risks per family member.
First, successful family partnerships understand the
need for lawyers, accountants and professional management. Having the proper legal articles in place is crucial.
These base documents should outline ownership percentages, voting rights, liability, life change parameters
(encompassing marriage, births and death), the selling
of ones’ ownership rights and any other pertinent documents.
Second, keep track of the money trail by investing in a
competent CPA and tax advisor, who can note initial investments, equity and liability, while also providing tax
guidance for the family.
Third, competent management of assets keeps individual family members protected from the pressures
to perform. Day-to-day operations are best left to the
professionals (CPM Members), who can properly guide
their decision making. Another benefit to familial business: should one property need capital improvements,
another property in the portfolio may have excess funds
to lend temporarily. The hired CPA would assist in providing the documents, and everyone wins.
Short of duct taping mouths closed, there’s very little
that can be done to manage the egos and family drama
that can exist—unless you choose a spokesperson from
the family, who can serve as the funnel for information
from management to the rest of the team. Of course, the
best laid plans aren’t always foolproof. Any partnership—
even between family members—can have troubles.