Do you want to create a successful family business?
Every business is different but the family dynamic brings a unique element to the operations. There is definitely no ‘one size fits all’ model for a family business!
While running a family business is complex, it comes with a competitive advantage. Family business’ often have a natural core set of values and beliefs that lead to a strong culture, something which traditional businesses often strive for however when family and business mix there is often a new level of complexity. Below are our top tips for creating a successful family business!
Leave work at work and home at home
Anyone with a family business can testify that business conversations have been had around the dinner table or in the bedroom. When the lines between home and business are blurred it can be difficult to separate family decisions with business decisions. It’s also important for your work life balance and healthy family relationships. For these reasons it is important to create rules to clearly separate home from business.
Communication is key
Open and clear communication is one of the most important measures of success for family business’. When it comes to family it becomes very important to remember who you are talking to and how that conversation would be had if they weren’t your relative. For example, are you talking to your marketing manager or your daughter? This leads into ensuring that family have clear roles within the business and understand their place now and in the future.
Have a Management Board
Having a management board that includes family and non-family is vital – don’t confuse ownership or inheritance with management. The mix of the right people ensures unbiased decisions and that choices are made for the success of the business, not just the family. If the business is not large enough for this, consider using other resources such as your Business Advisor.
Develop a succession plan
It’s easy to get caught up in the day to day routine of running your business but it is important to stop and think about where the business and the family want to be in 5-10 years. It’s important that the multiple generations are involved in this decision and everyone is on board so it may help to have an outside party to lead this discussion. From there a plan should be made which can (and likely will) change overtime but it’s important to start now. There are many intricacies with succession that our Advisory Specialists can assist with including ownership structuring, transition planning, risk prevention, business vision and many more.
Create a new generation of leaders
So your kids have decided to take over but you aren’t sure they’ll be ready? It is your role as the business leader to ensure the next generation is ready. This means coaching them, involving them with key stakeholders and showing them the intricacies of the business that only you know. There’s plenty of time for that later, right? Wrong! You need to start this process now. Leaders are not created overnight, it takes time to create a leader as great as you!
Remunerate family members for their value, not their bloodlines
It’s important in any business to pay staff for the value they add to the business with an eye on market rates. This is of paramount importance in a family business. Family members do not have a right to remuneration simply because of their relationship to the owners; they should be paid for their contribution. We should never confuse remuneration with the return on investment, and non-working family members should be rewarded based on their ownership proportion and nothing else.
At Accru Melbourne, we are very experienced in working with family businesses and understand the unique dynamics that operate within this very special sector. Contact our Business Advisory Specialists on (03) 9835 8200 or alternatively fill in your details below and we will be in touch.
