If you’re going to work in your family business, “follow the money”.
I’m not talking about putting more resources toward a service or product that seems to be taking off. I’m sure you know that’s likely to be a good bet. I’m talking about making sure you know where all the money goes.
Have you seen the movie Arbitrage, starring Richard Gere and Susan Sarandon?
I don’t want to spoil it for you, so I’ll just say this: You might be surprised by where the money in the business is going. In fact, too much of it may even be going to some of your closest relatives… (okay, I’ll stop there-I’ll just say that if you are a daughter in your family’s business, this is a movie for you).
No one likes surprises, particularly where money is concerned.
But some of you may feel that “the business will take care of you”. As a result, you may be paying less attention to money and finances than you should.
This is, as you know, the age of “transparency”. Many organizations are sharing financial information, encouraging employees to understand how their work directly affects the bottom line….and sharing the rewards.
Family businesses, particularly those with a long history, may find the transition to making finances more transparent both challenging and risky. You may not be at a point right now where you can or want to influence that approach, but you can certainly try to find out as much as you can about “where the money goes”.
So here are some of the basics:
Get a Check
If you don’t already get a paycheck (and some daughters don’t), ask for one-a real one that looks like the paychecks other employees get. Know where your own money is going…before you spend it.
CHECK the Check
Look at all the categories on the paycheck and learn what they mean. Note the hours, the tax withheld, any deductions for savings or insurance, etc. If it doesn’t make sense for you to get a paycheck now, ask your business accountant to show you a sample. At some point an employee may ask you to explain her paycheck and you’ll want to be prepared.
Check the Terms
There are times when family members may ask for loans from the business. You may too – to continue your education, to help with a mortgage, or other purposes. Be sure you understand the terms of the loans, yours and others’.
One challenge for family businesses is dealing with the conflict that simmers (or explodes) when family members borrow from the business but don’t honor their commitments. Set a good example.
Trust, but Verify
That adage, from a Russian proverb, makes a great deal of sense. It’s vital to trust your family. I’m not suggesting that you go around like a detective, checking every detail and looking for something suspicious. But it is important to trust your instincts, and speak up if you’re concerned about certain accounts or payments that don’t make sense to you.
You may feel that asking questions about where the money goes in your family’s business is off limits. Or, that you’re stepping on a landmine. But asking those questions is a perfectly legitimate part of being “in charge” of yourself, whether you’re an employee, a rising leader, or an owner.