Family-run businesses

Many misunderstandings and potential areas for dispute in family businesses can be avoided if you ensure good communication channels are in place.

The risks are that:

• family members assume they know what other family members feel or want
• personal ties inhibit honest opinions being expressed
• the head of the family may automatically assume control of the business even if they don't have the best business skills
• one family member ends up dominating the business
• family-member shareholders not active in the business fail to understand the objectives of those who are active, and vice versa
• personal resentments become business resentments, and vice versa
• non-family board or management members feel excluded

To avoid these pitfalls, you should foster an atmosphere in which open, honest discussion and communication is welcomed, and all family members feel comfortable enough to voice any concerns they might have.

There are a number of practical things you can do. You might:

• remove personal issues from business discussions by holding all meetings in a work rather than home environment
• create mechanisms for providing constructive feedback - this can help prevent staff, particularly non-family employees, from feeling demotivated and uninvolved
• arrange occasional away days to discuss the business' strategy and direction
• appoint a non-executive director to the board, or establish an advisory board to provide an impartial viewpoint and help prevent emotions from clouding business decisions
• establish a family constitution creating policies that will guide the family's relationship with the business