7 tips for creating a shared family business

On Behalf of | Mar 26, 2023 | BUSINESS & COMMERCIAL LAW - Business Formation & Planning

Family businesses and partnerships have been around for centuries and have proved successful models for many entrepreneurs. 

However, running a successful family business can be challenging as it involves navigating complex family dynamics and business decisions. Here are some tips on how to form a successful family business or partnership.

1. Clearly define roles and responsibilities

One of the most important aspects of running a successful family business is clearly defining each family member’s role and responsibility. Avoiding overlapping responsibilities and ensuring everyone clearly understands their job duties is crucial.

2. Develop a clear business plan

Developing a clear business plan is crucial for any business but essential for family businesses. This plan should outline the company’s mission, vision, and values, as well as its goals, strategies, and tactics. This will ensure everyone is on the same page and working towards the same goals.

3. Establish a governance structure

A governance structure is necessary for any family business or partnership. This should include a transparent decision-making process, a system for resolving conflicts, and a plan for succession in case one of the family members wants to retire or leave the business.

4. Communicate effectively

Communication is vital in any business but especially important in a family business. Establish regular communication channels and encourage open and honest communication between family members. This will help to avoid misunderstandings and conflicts down the line.

5. Separate business and family matters

It’s crucial to separate business matters from family matters. This means avoiding discussing business matters at family events and keeping personal issues out of the business. This will help to maintain healthy family relationships and ensure that business decisions are made based on what’s best for the company.

6. Hire non-family members in supporting roles

Hiring non-family members can bring new ideas and perspectives to the business. This can help to prevent the business from becoming too insular and stagnant. Hiring based on qualifications and cultural fit is important, rather than family ties.

7. Seek outside advice

Finally, seek outside advice from professionals such as accountants and business consultants. They can provide valuable insights and guidance on how to run a successful family business or partnership.

Running a successful family business or partnership requires careful planning, effective communication, and a clear governance structure.