Running any kind of business is tough work. But when you add in the additional challenges of running a family business, things can begin to get complicated – and personal!
In a family business, you’re not just dealing with professional relationships. You have close, personal relationships to factor in, alongside the nuanced dynamics of several family members all working in close proximity within a business environment.
But there are ways to ensure you run the governance and management of your family business in a smooth, sensible (and stress-free) way.
Families occasionally disagree and argue – that’s a fact we can’t change! But what you can do is put agreements, processes and good governance in place to make sure these disagreements are not detrimental to the future of your family business.
We’ve highlighted five simple steps you can take to improve your governance:
Family charter.
A family charter (or constitution) establishes shared values, principles and expectations for all family members involved in the business. This gives you a clear vision for the family business and fosters a sense of purpose within the company.
Family council.
Getting the whole family together in a room is invaluable. A family council provides a forum for open communication and decision-making, allowing everyone in the family to discuss business matters and address potential conflicts.
Clear shareholder agreement.
Well-defined shareholders’ agreement outlines the rights, responsibilities and expectations of each shareholder, so everyone understands where they stand. This is a huge help in preventing misunderstandings and conflicts.
Succession plan.
With a comprehensive succession plan you ensure a smooth transition of leadership and ownership when the head of the family business retires, sells up or exits. This maintains a sense of stability and continuity within the company.
Independent board.
Having an objective, external board is vital. An independent board of directors brings objectivity and expertise to the business. They can also deliver guidance and oversight to help you achieve truly ethical and responsible governance.
Talk to us about the future of your family business.
If you want the governance of your family business to run like clockwork, it’s important to have the right governance infrastructure and documentation in place from the beginning.
We’ve advised hundreds of family businesses over the years, and can help you set up the processes, agreements and strategic thinking that keeps the company on track.
Talk to our team and let’s see how we can take your family business to the next level.
