One problem that can lead to the demise of a family business is the misuse of company funds by owners and their family members.
The mind-set that “I’m entitled” will only harm the business. It may start with charging a few items to the farm account at the hardware store, but then it can easily escalate into the using farm funds to buy a car or even build a house. It may seem minor and harmless. But no matter what the level of unauthorized spending, when discovered by other business partners, it can cause irreparable damage, says Mike Salisbury, certified agricultural consultant and chief executive officer of Salisbury Management, in Eaton Rapids, Mich.
Here are three reasons why you don’t want to allow “entitlement” to happen in your farm business.
1 Loss of trust and respect. Once members of the family business demonstrate these behaviors, relationships deteriorate.
2 Damage to the business. Misuse of company funds can fray the relationship that you have with your lender, not to mention the damage it can do to your farm’s credit.
3 Long-term damage. The culture created by each generation has dramatic and long-lasting effects on the behavior of those who will lead the business in the future.