When some of the relatives in a family-owned business grow older, they
develop an attitude of status quo. They don't want things to change and are
afraid of risk. With this attitude, they can, and often do, block growth in
their family's business.
The solution to such a problem is to urge or suggest that the status quo
members slowly disappear from the scene of operation. One way to do this is to
dilute their influence in management decisions. For example, the status quo
relatives might be given the opportunity to convert their stock in the
corporation to preferred stock. Or they might sell some of their stock to the
younger relatives.
It might also be possible for the status quo relatives to think in terms of
gradual retirement. Their salaries can be reduced over several years, and they
can relinquish some of their interests. With the proper advice, it might be
possible for a small corporation to re-capitalize. A new partnership agreement
might be drawn up when the company is a partnership.
Such actions can take into account all of the growth of the business to that
particular point and can enable the retreating members to recover their equity.
Meanwhile, the manager and active relatives can renew their efforts toward
expanding the business.
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