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Owning a family business can be a rewarding way to establish a legacy and help provide for future generations. But the dynamics of a family-owned operation can prove uniquely challenging.
It pays to have very clear ground rules from the outset, and you’ll need to keep on top of them if you want to maintain a successful family business – and we’re not just talking about financial success.
1 Define Values
You need to understand what your family values are so that you can put appropriate structures in place with which to grow the business. So sit down with everyone involved, particularly in the early stages, and clearly define the role of the family in the business. Family values will be especially important as the younger generation come through. It enables them to understand why you’re here, how you got here, and where you want to the business to move forward to. Well defined values will also provide a stable foundation for the business.
2 Have A Succession Plan
A good business succession plan is the key factor in ensuring the business continues to thrive after you move on. Even if it’s early days, it’s important to have a plan for the future.
3 Open and Honest Communication Don’t let family matters get in the way of business. Schedule regular time to strictly talk about business. Don’t get side-tracked by personal family matters or petty disputes – stay focussed on discussions that are indepth, strategic and business related.
4 Separate Home and Business
Keep business life and home life separate. This will help keep an objective view on the running of the business and improve the overall business environment.
5 Get an Outside Point Of View
If the decision-making gets tricky, an outside point of view from a qualified outsider can be invaluable. This is particularly appropriate when thinking about growing the business. A qualified outsider can shine new light on the problems and also ensure new ideas aren’t lost in the tangle of family and relationships.
6 Family Strength
Ultimately the success of the family business comes down to the strength of the family unit. A number of family businesses have failed in the past because the family has failed. So just as you’ve scheduled time for strictly business discussions, schedule time to do the same with family. Organise a team-building event and remove yourself from the business environment and focus on building relationships within the family.
7 Get It On Paper
It’s often the case in family businesses that the normal practices can be overlooked – often there are verbal agreements and assurances instead. This “trust me” kind of arrangement can be fatal. Not documenting everything in writing as to what’s been agreed on can be a very costly mistake. For the sake of your family relationships, and your business, get everything clearly written down, clearly defining the terms of the arrangement or agreement. This may sound a bit over-the-top when it’s family – but it’s actually more important than ever that the lines are clear when family is involved. It will save you and your business time, money, angst and perhaps even loss of family relationships, down the track.
Source: Full Focus Ltd, Trial Balance Dec 2016