Guide

Family-run businesses

Key things to consider when setting up a family business

Setting up a family business can be an exciting challenge. Before you go ahead it's important to consider how you'll deal with a number of issues that can arise in family-run businesses. Consider:

  • how the business' shares will be allocated between family members and if there will be non-family shareholders
  • how to ensure business decisions are taken for business reasons, rather than personal ones
  • how the roles and responsibilities will differ between family shareholders who are active in the business, those who aren't, and outside shareholders
  • how to reward family members, whether it will be different to remuneration for non-family members and what problems this could cause
  • how you will cope with conflict when it arises
  • how to communicate with your family when you are also their boss
  • how to communicate with non-family managers to ensure they have the key operational information to perform their duties effectively
  • how to avoid resentment when deciding who will succeed you
  • how to ensure that the family's finances aren't entirely dependent on the business

For further information on family businesses see employing family members and transferring a business to a family member.