The summer holidays offer a good opportunity to get together and discuss plans for the future of your family business. Here are some rules to follow to make sure it’s only the barbeque that gets heated.
Don’t blur lines
Whatever happened to your family business during 2022, it likely faced new and unexpected challenges.
“For some family businesses it was all hands to the pump. For some, the word of the moment was ‘pivot’. For others it was just closing down,” says Philip Pryor of Family Business Central, a consultancy offering support and advice to family businesses. “We have had to call on family in ways we never had to before.”
Pryor recommends you agree with your family when you’re going to talk about business, and when you’re not. He calls this the Christmas dinner rule, but it applies to any special occasion, whether it’s Matariki, Hanukkah or a significant birthday.
Family downtime
The main rule is don’t talk turkey at the Christmas dinner table, just eat it.
Pryor suggests these rules of engagement:
- Talk about what else has been going on in the family. New hobbies. New adventures, large and small. What’s gone well. Near-misses. Comedy moments.
- Thank everyone for their support and their work. It’s been a challenging year and together you got through it.
- Celebrate being together.
“It all helps make sure you can all sit down together and genuinely enjoy each other’s company,” says Pryor.
Set aside business time
While business should be off the table at Christmas dinner, there’s nothing wrong with booking in some specific time during the break to talk about the business — just make sure it doesn’t infiltrate your family downtime.
Pryor suggests putting four key topics on the agenda:
- succession planning
- family governance
- transparency
- fairness.
Succession planning
Conversations about the future of a family business are important, even when the future seems a long way off. “One rule I say must be followed with all family business is ‘no surprises’,” Pryor says. “Talk to the next generation. Tell them what you want. Find out what they want. Have the conversations you need to have well before you’re forced to have those conversations.”
Create a clear plan to develop the next generation or another management option, eg a trusted employee. Also set up clear transition plans for the current generation. Establish what role the founder will take in the future, and how this could work with someone new at the helm.
Family governance
Discuss strategic issues, rather than the day-to-day running of the business. Examples include:
- family charters (similar to a treaty or constitution, these set out guiding principles and goals for a family business)
- shareholder agreements
- wills
- succession plans.
Make sure family governance matches and supports the business governance — the checks, balances and expert advice that keeps a business running smoothly and meeting its goals. Examples include workplace policies and directors’ duties.
If business governance isn’t sorted yet, that needs to be done too.
Keep things fair
Fairness is critical in family business, and it needs to be discussed and negotiated between family members. Even if no one says anything, they will be keeping an eye on who gets what and who seems to be doing more or less than others.
Have clear agreements and expectations on:
- who leads the business
- how family members work in the business.
Remember one family member can have as many as four different roles simultaneously, eg parent, shareholder, director and CEO.
Be transparent
If people feel things are hidden, or decisions are made without their input, it can lead to disagreements that could affect the running of the business.
“Juggling family relationships with business can be difficult. Family conflict can distract a business and lead to poor decision-making that negatively affects the business,” Pryor says. “Unclear expectations, lack of transparency and unfair decisions will tear a family and their business apart.”
It might feel uncomfortable to raise some of these topics. But it’s well worth it, says Pryor. Once everyone knows and agrees to the expectations and rules of the family business, both the business and the family will benefit.
“Business disagreements are far more likely to be resolved quickly and effectively. These can then be left at work. And family can get on with being family, especially at this time of year.”
Source: business.govt.nz
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