Family businesses account for many small businesses in Australia. However, many family businesses struggle due to emotional conflict between family members. Working with family can be advantageous but relies on effective planning to ensure success across generations. Here are some top tips for managing your family business and succeeding well into the future.
Clarify roles and responsibilities
One of the biggest problems with family businesses is conflict. It is vital to clarify each members’ role and responsibilities within the business. Clear governance structure will formalise what each member is responsible for and create a line between family and business. Consider each person’s skills and knowledge to ensure that everyone is happy with the work required of them. This will help with leaving work at work and home at home.
Document everything formally
Emotions run high in family businesses, as everyone is relying on the business for financial security. This makes it so important to keep formal documentation of everything, including contracts and agreements. Relying solely on verbal communication can cause chaos for the business. If conflict does arise, documentation can be utilised to reach the best outcome for the business.
You often assume that family members understand you well, but you need to share all good and bad news within the family business. Communication helps to build trust and transparency and will help to reach everybody’s goals and aspirations within the business.
Start succession planning early
Planning for succession will ensure continuity within the company when management changes hands to another family member. Without succession planning in place, an unexpected illness could pose a significant threat to the financial health of the family and the business. Succession planning can take years, so starting early will ensure that all parties are happy and agree on the transfer of ownership when the time comes. At The Farm Protectors, we believe that succession planning should start the day you commence your business and continue until it no longer exists.
Get external help
It helps to get help from outside advisors, such as financial advisors, for impartial advice regarding the family business. External advice will help ensure that the business continues to thrive into future generations.
Running a family business can be complicated. Through good communication and planning, your business can flourish, eliminating conflict and ensuring harmony within the business. If you are seeking external advice for your business, The Farm Protectors can assist your family business in building an effective governance structure and succession plan for the future.