Or if a family member needs to borrow money, the council will decide if it wants to create a fund for the purpose making family loans. Here are seven rules to follow to help you stave off some family business blunders.
One sibling may want to grow the business and keep it privately owned while another sibling may want to sell it or take it public. In a start-up or family business, everybody does everything. Family business experts concede that family ownership does have its privileges. But ideally this should be a five minute conversation, he says.
Be aware that, in a small or family-owned a family business plan, special favors given to family members and friends de-motivate employees and set a bad example, caution SCORE counselors. If you plan to seek private investors or go public in the future, dealings with family members outside of a business environment will be questioned and scrutinized.
Some family members will share the same values but not the same vision. Typically one family member of the council is appointed to report to board members or shareholders.
To foster a better climate among employees and improve continuous two-way communications consider holding company retreats in addition to family retreats. A family council comprises members who may be owners but not company employees. Award contracts based on merit.
Getty Conflicts are part of a normal experience for many small start-ups and family-owned businesses. Ideally you want to reevaluate the council after two years, at which point you may open the membership up to other family members and the next generation.
Hilburt-Davis says a structure that more and more family businesses are creating to help resolve these types of conflicts is a family council. The more dysfunctional the family is the smaller the group to begin with, cautions Hilburt-Davis.
This especially applies to copreneuers husband-and-wife teams. Again the council would examine how best to compensate these family members going forward.
Be careful not to show family members special treatment. But this is where a lot of conflicts occur. Agree and adhere to some kind of system, for example, some couples refuse to drive to or from work together.
Still, there are common rules of engagement for handling employees who are related by blood or marriage. Moreover, think twice about offering a contract to a supplier who is a relative.
These are perfect examples of meeting family needs with business resources, says Hilburt-Davis. Running a business together with your spouse is a balancing act. Ask yourself what you would do if this person was not a family member. When it comes to conflicts of interest in family businesses, Schwerzler believes these matters are more difficult to resolve, because there are three levels of interests at play—family issues, business issues, and ownership issues.
Seek out a mediator or consultant—family business therapists much like a marriage counselor—to help deal with family feuds, clashes about business strategy, and decisions about succession. Hilburt-Davis also suggests that family members attend industry workshops or conferences.
You have to professionalize the business. The ability to have an effective communication with all members of the organization is critical. Make sure that everyone has a role and responsibilities that are spelled out and are very clear, says Jane Hilburt-Davis, president of Cambridge-based Key Resources and co-author of Consulting to Family Businesses.Safe Kids Child Care day care business plan executive summary.
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