When seeking outside financing, family owned businesses need to effectively communicate the roles and responsibilities of its members.
On paper, the $1.5-million recycling company sounded like a good investment. But after meeting the husband-and-wife management team, venture capitalist Larry Waddell walked away. Although the wife was the CEO and had an impressive technical rÉsumÉ, her husband, the VP of sales and marketing, did all the talking. Waddell couldn't figure out who was really in charge. Confused roles can flag unresolved management conflicts. Family-owned businesses that seek outside financing need to show who's running the company, says Waddell, a managing director at Sustainable Jobs Fund LP. Couples should "clearly delineate what their roles and responsibilities are, and both members of the team [should] contribute when meeting with people doing financing," he says.