Family companies are special

Here is a list of matters that the Family, or owner-managed, business needs to consider, and some questions to which they need answers, upon which they need then to agree.

1. The key is a plan

“Do you want to work for the business or do you want the business to work for you?”
Identifying and planning for:

  • What the family wants
  • Where is the business now (SWOT analysis)?
  • Where the business is going?
  • Your personal needs and wishes (life style, retirement, etc).

2. Float it, flog it, or keep it?

  • Implications
  • Points to consider
  • Level of company performance that will need to be achieved.

3. Non-family professional management

  • When do you need to bring them in
  • Recruiting people who will fit
  • Equity considerations
  • How will you persuade them to stay?

4. Ownership and control

  • What’s the difference
  • Achieving participation without loss of control
  • Keeping it within the family
  • Keeping it within the executive family.

5. Are you ready to retire? Are they ready to succeed?

  • Outside activities, interests
  • Training; experience with another organisation?
  • Who’s best?
  • Handling those who are not good enough
  • Taking outside advice and help
  • Estate planning considerations.

6. What are the causes of conflict? How can they be avoided?

  • Family/business interface
  • Dividends v re-investment
  • Sale v retention
  • Succession
  • Equality v market worth and performance
  • Marriage, divorce, growing children
  • Just in-laws or really family
  • Across generations/families
  • Constant communication
  • Family constitution
  • Planning ahead
  • Consideration and identification of the needs of others.

7. Importance of planning

“It is never too soon to start planning. Tomorrow your whole life could be changed by some unforeseen occurrence”.

  • retirement
  • succession
  • transition
  • professional managers
  • death, divorce, accident
  • external; advice.

8. What should you do next?

  • develop a strategy
  • know (and agree) where you, the family and the business are going and then take professional advice
  • lay down a “family charter” to cover all business eventualities, such as – how family members will be paid; how they can expect to progress within the business; the role of professional management; the difference between shareholders and management.

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