There are lots of family businesses out there operating quite happily, with the minimum of structures, processes and controls. However, for those wishing to grow a profitable multi-generational family business, their chances of success are far greater when a more considered approach is taken to their management.
Based on my experience of working with family businesses, in and around Shropshire, those that accept the interdependence of their family and business and put in place supportive mechanisms, have a far greater chance of success.
Change is a normal part of any business, but the evolution of families alongside that of their businesses gives rise to even greater challenges and complexities, requiring a recognition of their emotional bond.
One of the most important and practical steps that family businesses can take, is to draw up a Family Business Charter, sometimes called a Family Business Plan, Agenda or Constitution. This not only outlines the core vision, values and agreed working practices, but provides a practical guide and framework to help deal fairly and reasonably with any potential disputes arising from within, and outside, the family.
For a Family Business Charter to be useful, it has to be a working document, providing guidelines for family members to deal with the interface between themselves and the business. Typically, they would support other governance processes such as business plans, partnership and/or shareholder agreements.
A Family Business Charter would normally include details on the following areas:
Considering each of these sections in turn, the family can explore important and sometimes difficult issues relating to the future of the business. For instance: what does the family plan to do with the enterprise in the long-term; what constitutes a fair distribution of assets among family members and will future managers be recruited from outside the family?
Agreeing approaches collaboratively and committing them to paper, encourages everyone involved with the Family Business to think more carefully and act systematically. In turn, this reduces the chances for misunderstandings to occur and resentments to fester. If problems do arise, having an agreed process to follow helps reduce some of the emotional aspects that can be so costly and destructive.
A well-thought out Family Business Charter can allow family businesses to grow and prosper, by maintaining harmony and co-operation and reducing the opportunity for conflict.
If you would like to find out more about Family Business Charters and how they might work for you, or how you would go about creating one, then please do get in touch by phone: 05600 434 727, email: firstname.lastname@example.org, Twitter: @KayHealdHR or LinkedIn: KayHeald.