30 tips for family businesses

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Take on board these 30 top tips from our experts in Your Family Business magazine to run a professional and successful family business.

  1. Corporatise. Get non-executive directors in. 
  2. Stick to a well-defined strategic plan. 
  3. Employ the best candidates. Look at the best-qualified person for the job and pay them a decent market salary.
  4. You’ve got to be nimble.
  5. Say no four, five times a day and you’ll make money.
  6. Make sure your business is professionalised. Make sure it’s benchmarked, that it’s profitable, and it gets the right sort of return. 
  7. Have a dividend policy so the shareholders know they’re going to get an ongoing return from the business and are encouraged to stay involved with the business. 
  8. Ensure systems are professionalised and in place to carry the business through the various stages of growth. As companies expand, the problems are different.
  9. Have good governance and structures in place. For the family, have a family council. For the business, have a board of directors with (at least) an equal number of independent directors as family members. 
  10. Employment is not a birthright, it’s a privilege. Be properly educated, whether through a trade or a profession, have adequate experience working outside the business for three to five years. Then, you get employed in the family business if there’s a job available and you’re the best candidate. 
  11. Talk about the family goals and what the family wants from the business. Make sure they’re being honest and realistic. 
  12. Shift to being business first, not family first in [the way] they manage the business. 
  13. Develop the skills and talents of the next generation. 
  14. Communicate. Talk about issues early, rather than avoid them. 
  15. Create clear agreements, expectations and structures so family members know what the rules are. 
  16. Think and act strategically while considering all three forms of family capital: financial, human, and social, including long-term strategic and short-term contingency planning for the family and the business (its owners, managers and staff).
  17. Have a well-defined family governance system (for example, a family board of directors or a family council) including criteria for membership, term limits, succession plans, a defined scope of work, clearly designed and an equally well-defined business governance system that identifies decision-making protocols and governance structures for the owners, managers and staff.
  18. Make a commitment among all family and business stakeholders to maintain effective, timely communication within the business and between the family and the business.
  19. Actively and consciously manage overlapping roles and relationships by encouraging family, manager and owner role clarity and by providing clear protocols for conflict resolution.
  20. Focus on developing opportunities for individuals in the family and business systems to grow as human beings while developing great skills, knowledge, attitudes and habits, and for those in the who have attained wisdom to share it with others, including best practices for risk assessment and management of the family and business’s financial and human capital.
  21. Recognise that a family business is complex because you’re dealing with family, management and business issues. It’s important for family businesses to deal with each of those circles and then understand how they interact: how does your family operate, how does your management operate, how does your business operate? How do they interrelate? 
  22. Decide why you’re doing it in the first place. Are you trying to build an empire, are you trying to provide a living for your family, are you looking to build a sheltered workshop for your children? Make a decision on why you’re doing it and then use that as a filter for all the decisions that you make in your business. 
  23. Be proud of being a family business. A lot of people hide around the fact that they’re a family business because they don’t want people to think that they’re small or weak. But it’s one of the best marketing advantages you’ve got. People want to work for family businesses, they want to be part of that culture. Use it as a way to attract employees. Don’t be afraid of it. 
  24. Communicate. A lot. At the end of the day, every understanding, whether it be in family or with the team at work generally, is all communication related. Communicate constantly, directly and honestly. 
  25. Network. Join Family Business Australia (www.fambiz.org.au) and participate in forums; mix with, and network with other family businesses because it is different. Family businesses have their own problems, so mix with those people because they share all of your pain (and your joy). Some of the real issues holding back your business might be family. 
  26. Establish the family’s shared values and individual/collective visions – these provide a frame of reference against which behaviours and decisions can be relatively objectively measured. 
  27. Create a Code of Conduct that all family members are willing to abide by, and do it well before there’s a major reason to need it! 
  28. Use an independent chair, a facilitator or a mediator to manage difficult meetings. 
  29. Have a shared plan and ensure everybody knows what the plan is.
  30. Structure, visions, values, missions, goals, strategies and objectives should all be documented and reviewed by the family members.

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