Blood feud
Dr. Alexander Stein weighs in on a broken family business in FSB's latest Business in Mind column. What do you think?
From Franz Karl Lingad Dear Sir,
This article helped me gain insight into our own family business. However,
It is still not at which point that the founder/ Chairman has passed away
yet.
My problem arises from the fact that I, as teh eldest child, am working with
my father for 5 years already. I became part of the company he founded,
through managing and expanding the local distribution of a line of wood
coatings products. At first it was hard, with the former technical sales rep
leaving within less than 2 years. All that was left was me to gear the
company to profitability. Years have passed and I initiated various systems
and marketing strategies that now made the brand, and the line boost sales,
increase revenue, boost margins and improve the company's bottom line. The
business side is doing well. Sales are increasing. The business still has a
long way to go, but its "going concern" will ensure a good sales
performance.
Our problem stems from the fact that on the financial side, the company is
heavily leveraged. The profits from the company, my father has kept it
secret to everyone, he keeps investing it in real estate. So in effect, the
company suffers in the state of a liquidity problem. since suppliers arent
paid on time (they are paid eventually), but the acquisition of real estate
properties keeps going on….Whats worse is that He never intends to have
these properties for rent, he said it aims to increase his net worth. No
income is generated from these acquisitions, and the company profits (future
profits) carry the amortization and interest payments from these
acquisitions. Loans and Asset backed lines of credit are maximized and also
add to the interest payments for these acquisitions. whats worse is that
salaries and wages, including my own have been flat since he feels he is
using the profits and future profits for his self net worth boost.
The business side has a lot of potential and the local construction market
is at a boom in Asia where we are situated, but as a financial management
graduate, i know that exhausting debt as a capital expense, can have
disastrous impacts on the company in the long run. What then will I do with
situation? I asked myself time and time again if it be better to work for
another firm at this point.
My siblings also play a role in "squandering" the profits as well" living
like kings and queens with an army of servants and living like bums with
nothing to do…..while my parents treat me like an employee…..
What is the next best alternative to do?
It's not just companies, but inheritances issues of any kind. We encouraged my in-laws to write a will, bought them an easy program, several children sat down and discussed their wishes, but neither parent did a will.
After they died (within months of each other) the 5 children spilt into factions, two level-headed ones against the three more emotional ones. Stuff disappeard from the house, accusations were thrown, and by the end the family barely even spoke to one another. Is that what their parents wanted? Who knows.