Deciding on what is best for the family and what is best for the business can mean different things, so it is important to consider and understand your philosophy. Paul Andrews explains more…
It is important to appreciate the philosophy behind the family and the business in order to make the right decisions for both going forward. Some believe that they family business is there to provide income and asset growth for family members whilst others may see it as a means of providing career opportunities to family members, as a heritage asset to be passed on or as a vehicle for doing good in the community.
There is no right or wrong as every family is different but it is important to appreciate the differences and where things can develop into issues at certain stages in the development of the family and the business.
Putting family first…
A family business that believes more in birthright than meritocracy is likely to be putting family first. In this case, family members may be preferred in terms of remuneration, promotion and other benefits. A family business that considers the family’s future before the company is also likely to be putting the family first. This is likely to serve the family well for a time, but can create an enormous challenge as more family members enter the system.
Putting business first…
On the other hand, a family business that treats family and non-family members on a similar basis and is more concerned about the long-term viability of the company is likely to be putting the business first. Everybody will benefit from the long-term success of the business, whether they play an active role or not. However, managing the business-first approach has its challenges, particularly when family emotions suggest that a decision is not fair.
Planning is key…
Carefully planned structures and guidelines will be helpful in managing the ‘issues’ that are likely to arise. Creating clarity around the rights and responsibilities of family members, employees and/or shareholders will make it easier to manage expectations accordingly.
As a family business there are a number of things that should be considered:
Family businesses often struggle with determining whether they put the family or business first, and when relationships are so inextricably linked to the business it is easy to see why.
