Family-run ventures have deep roots worldwide, making them a driving force in local and global economies. As one of the oldest forms of business organisation, family firms have their own unique advantages and disadvantages.
A successful family business can provide you with a vital opportunity to build the company and help you in passing it down to the next generation. However, it’s important to note that for this type of business to thrive, it has to be not only well-founded but well-run.
The succession of a family business should be a crucial priority for every enterprise that seeks to achieve long-term business longevity. Here are 6 tips for running a booming business to helping your family firm prosper throughout the generations.
Divide roles and responsibilities
A good sense of structuring aids in keeping operations highly professional whilst improving the accountability (and purpose) of employees.
There are instances where various family members within the same entity are equally qualified for similar tasks, making certain day-to-day tasks overlap. Like every employee within an organisation, family members need to have a detailed job description that articulates specific responsibilities, key tasks and employee goals. A clear division of roles and responsibilities is key to uplifting business objectives.
Maintain a high level of transparency
Internal transparency is beneficial to a healthy company culture because it gives employees the engagement boost they need while demonstrating trust between management and employees.
Instances where family members feel they are not kept adequately informed about operations can lead to tension.
A recommended practice is to circulate corporate books and records, tax returns, contracts and other important financial and legal documents among all owners of the family firm. Apart from that, setting up regular review meetings where business owners might give their input in significant legal and accounting developments, for example, improves the level of transparency.
Be prepared to set boundaries
Effectively separating personal and professional relations is one of the most crucial practices to a family-run company’s success. Indeed, the characteristics of a healthy business may not always be compatible with family harmony, so be ready to face those situations when they arise. While each person has a familial role, those roles should not necessarily carry over into the business if the role does not correspond with the needs of the individual or the business.
Keep employment agreements in writing
The most common issue in a family-owned business is forgetting that ‘family’ should not be emphasised more than ‘business’.
An effective way of maintaining a balance between the professional demands of running a business and family dynamics is by embracing formalities and professionalism by keeping agreements in writing. The best way to minimise the informalities of family-run firms is to issue employment agreements for everyone working in the business which specify job duties, performance metrics and more.
Continue to evolve and broaden perspectives
When it comes to working towards longevity and the success that comes with it, changing with the times is essential for any business, especially multigenerational family firms.
Forward-thinking, innovative ideas and creativity can sometimes get lost in a web of family relationships. Seeking advice from people who aren’t family members will help you incorporate new trends and keep operations current.
Plan for the future
It is necessary that a family business plans ahead by developing a succession plan that steers away from the risks of the future.
The purpose of succession planning is to make sure a company always has the right leaders in place should a change happen quickly. By failing to create an orderly plan for succession, your company may not get a second chance if it doesn’t adapt immediately when it is time to identify replacements for high-level positions.
Where We Come In
Looking to secure a sustainable family business dynamic across generations? Our advisors are experienced in providing enterprising family businesses with a skilled independent view that effectively manages today’s issues, whilst planning for the future.
Contact Firstbridge to set up a consultation at [email protected]
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