There are specific challenges to running a family business. With the right governance measures in place, you can foster harmony and ensure the family business thrives.
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:
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
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 can help you set up the processes, agreements and strategic thinking that keeps your family business on track.
Talk to us about the future of your family business.
About Pathfinder Solutions
Pathfinder Solutions advisory team members have either owned or managed businesses, or are investors themselves, so we know first-hand the challenges you face in your world.
Sure we’re Accountants, but the best solutions in business come from focusing on more than just the numbers. Our real-world business experience delivers just that.
