As your business grows, involving family members can bring both benefits and challenges. It’s important to formalise arrangements early, while the business and family group are still relatively small, to help avoid and manage future conflicts. The key starting point is to map what relationships already exist and their natures, identifying key stakeholders, and highlighting any potential conflicts of interest. This analysis can also show whether your business has the right mix of skills or if external advice or non-executive directors are needed.
Having a sound and 'lived' statement of purpose and core values can give your business a competitive edge and help unite the family behind shared objectives. Establishing appropriate governance structures is crucial; set out how family and business decisions will be made, and ensure good communication between both sides. Larger families often have a family constitution or charter, which sets out values, roles, and policies on issues like employment, share transfers, and succession.
On the business side, it is also important to establish a sound constitution and strong governance disciplines to ensure ownership rights are protected, with appropriate board structures established.
If your business is run as a partnership, now might be the time to incorporate it to benefit from protection of limited liability, an easily transferable share structure and customisable share rights.
Our Family Businesses team has extensive experience advising at all points in their life cycle, from reviewing governance arrangements to providing stewardship training and acting as intermediaries in discissions regarding the future of your business. We also advise on corporate and business restructurings and tax matters, helping you prepare for a smooth transition to the next generation.
Read the full the article.