By Daniel Vevang, University of St. Thomas Family Business Center
Within business families, misunderstood attitudes towards wealth can directly affect ownership transfer and employment in the family business.
The UST Family Business Center recently brought in five local family business advisers from a variety of professions to talk about how your money attitude can impact the personal, financial and legal aspects of a family business. There are strong, unconsidered and unspoken narratives about money that affect decision-making and relationships within both the business and the family.
In less than 10 minutes you can determine your own money attitude using this tool.
The speakers pointed out that your money profile might not fit exactly what you want it to be. You might be a “provider,” someone who finds meaning in giving to others or--a “conserver” who feels safer saving.
Armed with a real understanding of money stories, it is possible to craft employment policies and ownership transfer plans that reflect the real requirements of all parties and avoid conflicts.
A senior generation owner might not have a clear idea that his or her need for control over money is the real basis of all of his wealth transfer plans. Next generation members of the family interested in working in the family business might have very different money profiles that directly conflict. Is there a policy for employment that clearly separates employee pay from ownership compensation? A family member employee arbitrarily making more than a non-family manager can be just as contentious and damaging as two siblings arbitrarily compensated identically regardless of performance. Ideas of fairness and appropriate compensation are often driven by money attitudes.
Money attitudes have a subtle influence that determines many of our behaviors towards money and wealth. In many ways, you don’t choose your money attitude, but understanding your profile can be the first step towards making strong financial decisions, and having improved conversations about money.