Many successful enterprises in the world comprise of family-owned businesses. However, very few of them maintain their legacy and many of them often do not make it to the third generation.
The main factors that lead to the collapse of many family-owned businesses are issues to do with poor family members’ relationships, lack of clear management structures, and poor ownership and succession agreements among others.
The main factors that lead to the collapse of many family-owned businesses are issues to do with poor family members’ relationships, lack of clear management structures, and poor ownership and succession agreements among others.
Running a family-owned business requires a strong, focused and goal-oriented team that will carry the business dream and pass it to future generations successfully.
If you are running or planning to start a family-owned business, the below tips will help you run a reputable family-owned business that will guarantee profit, growth, good relationship as well as sustainable future generation succession.
1. Set clear job roles
Ensure that you establish a clear management structure defining the role of every family member who is actively involved in the day to day running of the business.
Setting clear job roles ensure that family members do not engage in multiple job positions thus reducing conflict of interest. Jobs should be assigned according to the qualifications and capability of each family member.
For this to happen, there must be a strong leadership team which spearheads all the necessary activities to ensure everything is performed as per the guidelines. Use forums such as business meetings to discuss every individual role, talents and expertise.
When there are clear job roles, everyone feels motivated and business is run in a professional way.
2. Hire few professionals outside the family unit
Having few employees from outside can really help in making unbiased decisions regarding the business. It is always advisable that you hire at least one professional to sit in the board of directors.
This will give the business a chance to tap into talents and special skills that other family members do not have.
When you hire such professionals, they will deliver outstanding results and also serve as mentors for future generations.
Professionals who are not family members will make non-biased decisions and they can serve a great role in helping the board prepare company’s strategic plans.
3. Communication is necessary
When running any partnership business, communication is an integral component of the business entity. Everything should be put clear and all members of the family should communicate effectively with each other.
Proper communication in a family-owned business should be built by embracing positive values such as transparency and trust in all deeds.
When there is a defined communication channel, the flow of information becomes easier and every person is able to understand each other in a more profound manner.
Strong family communication bonds can be enhanced through regular family social events such as hikes, dinners, and team building activities where business matters should not be discussed.
4. Empower the next generation
The future generations are essential in determining the sustainability of a family-owned business. If you want your business legacy to be carried on to future generations, empowering the next generation is a must.
Build a strong foundation to your family members by encouraging them to pursue their career dreams. You should also try and give them a chance to work in the business either part-time or full-time at will so that they can gain the necessary experience.
Empowering should include giving them freedom to choose their own career path and letting them decide whether they would wish to work in the family-owned business or either venture into new businesses that is totally different.
5. Draft a family constitution
Preparing a family constitution serves as a guide which stipulates every member rights, ownership, and responsibility. Constitution helps in setting everything clear thus, reducing conflicts among family members because every concept is enshrined in the family constitution. When drafting
When drafting constitution, the most essential components to include are; Ownership policy, succession planning, Mission and Vision statements, dividends and benefits policy, rules guiding appointment of the board of directors among others.
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