Can a family business survive sibling disputes?

On Behalf of | Jun 20, 2023 | Business, Litigation

Family businesses are a cornerstone of American society, with half the nation’s GDP generated by small family-owned businesses. Customers may like the familial atmosphere of seeing two or three generations working together or the dynamic of sisters and brothers melding family and work life together. Still, that dream can become a nightmare if siblings are at odds with one another, which is why an estimated 77% of businesses fail, often by the third generation.

Conflicts are a common cause

Blood may be thicker than water, but unrelated business partners often come together because of similar business interests and goals. Partners with the same last name may only have that name in common. Common sticking points include:

  • It is complex: If there is a compromise, the differing opinions can mean a broader perspective. However, sharing a life together without those experiences coloring the business relationship is hard, for better or worse.
  • Lack of ability: A parent may have been a gifted entrepreneur, but the children may not inherit that gene. Nearly every business needs to adapt and change over time to the changing marketplace, and the following generations may need help to pivot to new ideas.
  • Not outsourcing: Subsequent generations may understand they need help, but sharing control can be tricky. Bringing in an outside expert can threaten or raise concerns about the cost.
  • Different business philosophies: Perhaps the interpersonal stuff is fine, but siblings clash on how to move forward. It is common for siblings to have different ways of doing things and different goals. For example, one partner may want to roll out new products while the other wants to focus on infrastructure.
  • Different approaches: Some are 9-5ers who turn off the lights and go home at the end of the day. Others work 24-7 because they can or need to. These differences can cause resentment.

Resolving these matters

Family issues have a way of being studiously avoided until they explode in the faces of the owners, perhaps after trying arbitration or mediation. The only way to save the business or protect one’s business interests is to litigate the matter in court before a judge. This solution can resolve issues in ways that other options cannot.