Family businesses can be wonderful. And challenging. Or maybe difficult and challenging. Or maybe all of it all at once. If siblings are involved there are issues to be worked through on the way towards a smoothly running business, especially if the business was started by the older generation and then handed over. Here are a few key points to consider:
- Clear away any unfinished business or lingering emotional issues first. Unresolved issues will clutter any discussions going forward. Rivalries, old wounds, and tendencies towards competition can derail a business. Invest in a weekend retreat or series of sessions with a trained facilitator. Decide up front if this is even a course worth pursuing. If it isn’t then involve legal counsel to draw up a buy-sell agreement and documents that consolidate ownership into fewer hands.
- Determine up front what the vision for the company is, and agree on it. If one sibling wants to grow an empire while another is happy to keep the business the same size it is now, there will be big problems. Come to agreement on size, direction, and other matters so that everyone knows right off the bat where this is headed.
- Your business needs an organizational chart and clear job descriptions for everyone. Who will fill which niche, how much responsibility will each person have and for what areas, what are the regular duties to perform. How will performance be measured? These are key questions for any person in a business, but especially key when emotional and family factors are at play. Take subjective judgment and the potential for favoritism out of the equation by using well-written documentation.
- Write clear compensation policies and stick to them. What people are paid should be based on job performance and in accordance with industry standards. Take the emotion out of this completely if you can. Hire an HR consultant if you need to.
- Decide how communication will occur (in writing? During regular meetings?) and be sure to include a policy on conflict resolution. How will things be brought out into the open and dealt with (in a timely manner)? Ignoring conflicts will just lead to greater ones down the road, and that can spell disaster.
- Develop a board of advisors and pay serious attention to their advice. Members of this group should include your attorney, your CPA, and people outside your business who have expertise in marketing, personnel, your industry, and other related matters that impact your business.
- Create a set of policies (in writing!) that govern perks, privileges and conduct. Who will get the sports tickets? How often may company equipment be used at home? Where will charity dollars be allocated to, and who will decide? How much financial information will be shared (things like extra gifts from mom and dad, personal tax information, prenuptial or divorce documents)?
- Figure out ways to enjoy each other’s company on your off hours. You’re still brothers and sisters, so enjoy family holidays and find ways to strengthen your family bonds.