At its best, a family business is a vibrant partnership whose values radiate throughout the company.
Unfortunately, family businesses can often be risky enterprises too, especially those that are reactive rather than proactive and rely too much on ‘blood loyalties’.
Let’s look at some smart strategies for starting or buying a business with family members.
Agree on a leadership structure
A business can be a tough test of family bonds so, no matter how strong the loyalties, it’s essential to put an agreement in place that spells out the decision-making process.
While this can just mean how management decisions are made, to be effective it should clearly detail leadership roles and responsibilities.
It should also, for example, determine the criteria that applies to critical appointments and senior promotions at boardroom level.
Professional help will be invaluable at this stage, and family businesses seldom regret consulting independent opinion – especially at the outset when such agreements are more easily secured.
Such action can add an air of transparency and fairness – a distinct advantage if problems arise later.
Agree on a corporate strategy
All companies should plan ahead, but family-run concerns particularly need to set out a clear strategy for investment priorities, remuneration structures and how company profits are distributed.
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