Blackburn Accounting - Family Business

In families and Family Business relationship dynamics can be positive, powerful, fragile or destructive. How this plays out will determine success or otherwise.

Key to a successful enterprise is to make sure the family understands that the Business is a commercial venture and needs to be run in a professional way for the benefit of all concerned.

When it comes to the question Who is the Boss, the leader, conflicting dynamics, and power struggles can and do create some thorny and sometimes toxic situations. Further adding fuel to the fire is whether the leader has formally delegated authority or not, has taken over by default or acquired by stealth!

In this sticky predicament, determining ‘who’s the boss’ relies on several instruments, including separating family roles from Executive, defined Governance and transparent Succession Planning.

Developing a Strong Business Structure:

Separate Ownership from Management. Importantly, know the lines, boundaries of operation, and roles to ensure there is no blurring of authority or misunderstanding.

Establish Clearly Defined Roles & Authority. Be professional; all roles should have job descriptions and responsibilities clearly stated. This also applies to ‘who gives the orders' and 'who is responsible for the decisions'!’ Ensure reporting lines are established to guide everyone and support a smoother-running operation. Delegated authority, budget, spending, and purchasing limits are examples.

Provide Training and Development. Continuous learning and improvement are a must. Development opportunities should be part of the growth brief for both Bosses and staff in any enterprise, any industry, big or small. All Bosses need the necessary skills to inspire, motivate, and gain respect and loyalty.

Good Governance is essential. Choose a governance model that best suits your Business needs. A robust governance framework will allow stakeholders to be involved and work as a team to achieve business objectives. Every member needs to be willing to accept responsibility and be accountable.

Governance Example: 3 Circle Governance Model – adopting this model can help prevent family emotions from dictating corporate decisions. 1. Family Circle 2. Ownership circle 3. Business circle.

Develop a Succession Plan. A formal Succession Plan is critical for any family Business. Begin by asking the ‘hard questions’! ‘Is there potential for the Business to stay in the family?’ Does the next generation want to take the reins? Is there a positive relationship, dynamics between family members, potential successors? Focus on objectives and not personalities or favourites when considering and making these decisions.
Dealing with Challenges. To mitigate potential problems or deal with any issues, every Business needs to have formal HR policies, including conflict resolution strategies to address challenges. Personality clashes, power struggles, and differences of opinion can cause horrific headaches and damage to the Business and family relations. Don’t let disputes fester. Seek external professional help if needed. A Mediator or Business Advisor can provide impartial, independent advice.

Blackburn Accounting is your Family Business Specialist offering solutions to the following matters;