Frequently Asked Questions in Family Business
What problems are most frequently named
by family businesses as interfering with happy families and
successful companies?
Think problems of the 'softer side'! It is rare that technical
issues, such as failure to create an estate plan, to decide
on a family employment plan or governance structure get in
the way of progress. The problems or failure to act on great
planning are human dynamics. Ask any lawyer or accountant
what hinders their plans from being implemented and they will
acknowledge that it is the people issues of : loyalty, inability
to communicate or agree on goals, greed, or past issues. Here
are some of the key issues most frequently cited as interfering
with successful family businesses:
- Family communications
- Conflicts
- Chose of successor
- Agreement on values and strategic direction
What makes family business unique?
Think of family businesses as the 'graduate school' of companies.
Both the family and the firm have tremendous challenges. The
stakes are very high if either the family or the business
fails. The unique challenges of family businesses include:
- Challenge of managing the boundaries between family and
businesses
- Communication is much more complicated
- Families in business have to analyze, deliberate, plan
in ways that other families do not have to
- Emotionality can run very high and get in the way of sound
business decision-making.
What are the important things to consider
in succession planning?
Planning for succession is one of the most important jobs
a family business has. Since it includes both the transfer
of ownership and management, the family and business must
evaluate carefully the next generation's ability to take over,
as well as planning for the older generation's financial security.
There is nothing like succession planning to bring out the
best or the worst in a family! Here are some suggestions for
success:
- Plan early and often
- Consider success as involving the transfer of both ownership
and management responsibilities
- Informal succession involves the life long preparation
for assuming leadership responsibilities; formal succession
is a much shorter period of time that involves signing of
documents and the involvement of professionals.
What are some of the structures that can be
put into place to promote success?
- Family Council-a regular meeting forum for family members
to learn about the business, make plans, develop leadership
in the next generation, share understandings, and define
the limits of family involvement in the business
- Family Charter-a written document that spells out the
goals, purpose, values of the family and that establishes
policies about the family assets.
- Family Retreats-a meeting of the whole family that combines
both business and pleasure, usually over a 2-3 day period
of time and often employing the services of a facilitator
and/ expert in the field to organize and inform the family.
- " An ownership forum is often created by an older
and more complex family business. This group can act as
a resource to the board and represents the owners' interests
and values.
What does it mean to 'professionalize' the
family business?
Plan for the growth of your family business. The smaller
and younger family business informal policies and procedures
work fine. But as the family and the firm grow, the more critical
it is to exchange informal contracts ("We all get along
and just share the jobs in the office.") with more formal
job descriptions, and formal policies and legally binding
agreements. Sometimes families see the inability to continue
the informal ways of operating and creates tension in the
family and the ownership as a failure. If introduced in the
right way, these more formal and legal agreements can provide
the correct infrastructure for solving conflicts, growing
the business, and involving the next generation. Some of these
more formal structures and procedures include:
- Create a 'real' board of directors
- Create a family council
- Create policies and procedures for compensation, employment
contracts, bringing in the next generation, team building,
management and strategic planning.
- Draft shareholder agreements that articulate clearly the
policies concerning ownership rights and expectations, and
policies for ownership transfer and decision-making.
What services does Key Resources offer?
Key Rresources offers a range of professional services to
your family busness. As a leader in the field of family business
consulting, Jane Hilburt-Davis, founder of the firm, oversees
a trusted, customized relationship with your family and you
business. Each step in the consulting process is in careful
collaboration with each client. Some of the services include:
- Family
- Developing better, more effective communications
- Resolving conflicts
- Organizing and facilitating family retreats
- Developing family charters
- Building Family Councils
- Dealing with intergenerational conflicts
- Developing next generation forums for training, education,
and support
- Business
- Strategic planning
- Team building: management and executive
- Leadership assessment and development
- Policies re: compensations
- Shareholder agreements
- Ownership/Governance
- Developing 'real' boards
- Running effective board meetings
- Long range strategic planning
- Continuity planning
- Skill Building and Training
- Conflict management skills
- Successful communication strategies
- Developing family mission statements based on shared
values
- Raising responsible children
- Running a successful family retreat.
- Developing an effective family council
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