The family business: failing to plan is commonplace.

• Author: Simmonds, Rich
• Position: Private companies

Balancing the books to benefit both company growth and an owner's personal finances is a common concern for financial executives of family-owned companies. When the question arises, the easy answer is "feed the firm first, because the firm feeds the family." But anyone with a front-row seat to the Hilton family sideshow or the Bancroft family's complex drama in the face of News Corp.'s drawn-out but successful bid for Dow Jones & Co. knows that balancing financial affairs is never easy.

Not all family businesses will find themselves in the headlines, but financial executives at family-run companies face a number of challenges of their own. The global economy promises new rewards but greater demands than ever before. Competition for cash flow, profits and dividend payouts pull resources in different directions.

Getting younger family members up to speed on business operations takes time and, of course, many share the experience of a company decision being changed overnight after a family dinner table conversation.

Knowing the pressures owners face can help balance the needs of both company and family finances. Recent research on top family business leaders across the country identified challenges that family dynamics and generational transfers can have on business priorities and operational procedures. According the Family to Family: Laird Norton Tyee Family Business Survey 2007:

* Family finances tied to business success: 93 percent of respondents have little or no income diversification, deriving the majority of the family's income and security from the business. For 88 percent of respondents, their business was the primary source of income, not only for themselves but also for their families.

* No new leaders: Nearly 60 percent of majority-share owners in family businesses are 55 or older and 30 percent are 65 or older, but less than a third have succession plans and fewer than 40 percent have a successor lined up.

* Lack of qualification requirements: Two-thirds of family businesses don't require family members to have special qualifications or related experience necessary to be successful when entering the business. Twenty-five percent think the "next" generation is not competent enough to take the reins.

* Charging ahead with no formalized goals: More than 96 percent of American family businesses anticipate that their business will expand, or at least remain the same size, over the next year, yet nearly half of are operating without a...