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Solving the Puzzle of Ownership Alignment in a Family Enterprise

Monday, 14 August 2017

alignment  noun | ə-ˈlīn-mənt State of agreement or cooperation among persons, groups, nations and the like with a common cause or view

 

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Seven Steps to Recruiting Value Add Independent Directors

Monday, 14 August 2017

Incorporating independent directors into a family firm’s board is considered one of the standards for family business success. The prospect of

 

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Delivering a Difficult Message: Performance Feedback in a Family Business

Monday, 14 August 2017

“My brother is not pulling his weight at work, which means more work for our mother and me. I don’t know what to do about it… so I do nothing,

 

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Profit is Personal for a Family Business
Wednesday, 25 May 2016 13:39

In a family business, the impact of any profits are seen and felt daily by those involved in the business, as well as those affected by the business' performance. A good turnover means those extra lessons for an owner's child, or a new home for a family member.

 

The business is borne out of the family's need, and its main responsibility is to look after those involved in it.

 

 

So how is profitability measured in a family business?

True profitability in a family business is not just about the figures and bottom line – but is rather measured in the goals and lives of the family behind the business.

Family Stakeholders must see the profit going towards the right expenses.

The firm can get buy in from stakeholders when they can first see that family members within the business are looked after properly in terms of salary and benefits, and how family members affected by, but not directly involved in the business, are treated by the company's Related Party Transaction Policy.

 

Lastly, the Philanthropic Expenditure Policy is also of high importance to stakeholders – showing that money is being spent on the right causes that are close to the family's values.

 

 

A family business is still a business

As much as the context and qualitative element of the profit is important to the business, so is the quantitative results to discern just how well the business is performing.

In order to know if the year's profit is good or not, it must be measured against the following:

 

Last year's profit yield
Expected profit
Return on owner's equity
Profit margin
Return on assets


These factors gives the profit true context and meaning to determine the health of the business in its own right, and not against the family's needs. As important as it is for the business to serve the family, it can only do that successfully when it is treated as its own free-standing entity, with its own needs, when it is assessed.

 

 

 

Who gets to decide on the profitability goals?

Considering the sometimes differing goals of these two entities – the family and the business – within a family business, it's important for a middle ground to be struck.

While the voice of the family in the different levels of the business are important, at the end of the day decisions regarding the business should be left in the hands of shareholders and shareholders alone. They are the ones with feet in both camps and will have the needs of both the family and the business at heart.

 

No decision should be made in a vacuum though, as for the family to continue to support the business, they need to understand and buy into the profitability goals of the business at all times.

 

 

 

 

 

 

Source:http://www.kpmgfamilybusiness.com/profit-is-personal-for-a-family-business/

 
Starting a Family Business? Here's a Slice of Advice.
Tuesday, 24 May 2016 15:12

Brothers Kelly and Keith Toppazzini are the owners of Canada-based Topper's Pizza, a pizza franchise their father, Ron, founded back in 1982. Over the last 33 years, their family business has expanded to 35 traditional quick-service pizzerias and one traditional location.

 

From a young age, both Kelly and Keith were involved in the planning, construction and operation of the the first location. Here, they share these best practices for keeping a family business thriving.

 

 

Set rules to establish culture


The right set of rules helps to cultivate the business culture family business owners want. "To cultivate a happy, successful, energetic and passionate team, all members must be in alignment and in sync," Kelly explains.

 

Kelly hired advisers to create "Toppazzini Rules," a set of guidelines intended to protect the entire team and preserve company culture. One of the rules is designed to promote fairness and avoid nepotism -- and there are no exceptions. For example, Kelly's daughter is graduating this year, and has to work somewhere else for two years before she can apply for a senior position in the family business.

 

 

 

 

Nurture your people


It's important as a leader to help each team member figure out how they can grow their careers. Kelly asks her employees the following questions: What are your goals? How do you want to grow with this company? Where do you see yourself in the next five to 10 years? The brothers try to operate with 100-percent transparency, which leads to trust and a sense that there is a level playing field for advancing in the family business.

 

 

 

 

Promote non-family members


Kelly explained that one of the keys to building a successful franchise system is to promote non-family members to senior roles. Hiring senior level employees at the director level is a key business strategy that Topper's is relying on to take their family business to the next level. Kelly finds that, in addition to providing new perspective, non-family leaders reduce emotionally-charged decision making.

 

 

 

 

Treat customers like family


Family businesses have a unique competitive advantage. Families who do business together want to build a legacy, which is different from just building a business to sell it. "The continuous level of care that a family brings to the business really affects your sales in a positive way," Kelly says. "Family members will always take care of the customers, which creates loyalty from customers, which in turn increases our sales overall." The Topper's team extends that level of care to the community, making it a point to partner with several charitable organizations.

 

 

 

Instill core values


Running a family-owned business isn't for everyone. "New businesses are tough to start and tougher to grow," warns Kelly.

Couples should start a family business if they are able to create a strong foundation of communication and trust; their talents and strengths should also complement one another.

 

Exposing kids to the family business is also important. Kelly's children, for instance, have worked for the company as part-time employees while going to school.

 

Finally, Kelly advises that business owners remain as hands on as possible. He spends much of his time shaping the company culture and communicating with the operational team.

 

And when it comes to strategizing a plan for his business, he doesn't just leave it to chance; he travels to different locations to gather information, looking for ways to improve the products and the brand.

 

 

 

 

 

 

Source: https://www.entrepreneur.com/article/243869

 
10 Tips for Bringing Your Children Into the Family Business
Monday, 23 May 2016 13:37

Thinking about bringing your children into your family or small business? Beware! This can be either a blessing or a curse depending on how you do it. Experience shows there are right ways to introduce your offspring into your business and, most decidedly, wrong ways. The following are 10 tips for pursuing the former and avoiding the latter.

 

 

 

1) Have them work elsewhere for at least five years.

There are plenty of rationalizations for why people hire their children as soon as formal schooling has ended. "We need help right away." "They would learn more here than they would anywhere else." "I'm getting older, and I need my potential successors around me." All are good reasons; however, the main reasons for having your children work elsewhere have to do with them, not you! They need time to mature, individuate and gain confidence learning and doing things as distinct human beings rather than just children of successful parents. They need to learn how to work, to be punctual, to earn their own money and to be held accountable. Everyone wins when potential successors have excellent training and gain skills and confidence outside the nuclear family.

 

 

 

2) Understand generational differences.

Today's young people are more to more likely to want to "work to live." Contrast that with their parent's "live to work" orientation. The generation gap is very much alive in family businesses; the senior generation is mystified that their children don't want to work 80-hour work weeks. They see the live-to-work mind-set as a lack of commitment to the business, and that's not entirely fair nor is it cognizant of their children's – and other younger employees — desires for a different workplace experience.

 

 

 

3) Give them psychometric assessments to make sure their personalities and capabilities fit the jobs contemplated.

Two older brothers were very frustrated with their younger sibling. He just didn't seem capable. Assessments revealed that he was temperamentally unsuited for his role in the family firm; he was in a position that demanded amazing attention to detail and strict deadlines, but he had much more of a big-picture, laissez-faire attitude. How had he come to be in this position? His older brothers, having entered the family business earlier, took the roles for which they were best suited. When he came along, the only management position available was this one; he was very much a square peg in a round hole. Some initial assessment for job fit would've gone a long way toward improving both business function and family harmony.

 

 

 

4) Hold them strictly accountable.

 but not to an unreasonable standard. Family members, more than any other employees, need to be held accountable for their actions. They need to have crystal-clear roles and responsibilities and regular reviews to make sure they're living up to the requirements of their job descriptions. The biggest morale killer in small businesses is underperforming or dysfunctional family members who are allowed to meander through various roles in the business with virtually no accountability and to inflict themselves on others in the organization. The opportunity costs for coddling underperforming family members are tremendous.

 

 

 

5) Communicate formally and regularly with a third-party facilitator.

It's hard to be in a family, and it's really hard to be a member of a family business. You can take to the bank the fact that virtually every family employee thinks she works harder and contributes more than anyone else and stews over this "fact." Family businesses have a greater need for formal communication in order to resolve perceived contribution issues as well as discuss and resolve a host of other pressing family and business ones. If they could discuss these often volatile topics constructively and productively by themselves, they would. Since they usually can't, they should seek the help of a talented facilitator to get the most out of themselves and their meetings.

 

 

 

6) Don't assume there's interest in working in the business.

In the 1995 movie "Sabrina," Harrison Ford laments to Julia Ormond, "I've been following in footsteps all my life." Don't assume that your children or grandchildren want to follow in your footsteps. And they shouldn't assume that you want them to! A family member entering your small business ought to do so intentionally of his free will. Make entry into the business formal and deliberate vs. casual and impulsive. A family hire should be treated at least as carefully and rigorously as any other hire.

 

 

 

7) You shouldn't hire a family member because he "needs a job."

Related – don't let anyone flunk into a job. You should demand that a potential family hire be able to walk into your place of business with his head held high. He should be able to point to accomplishments in previous jobs, promotions and valuable leadership experiences. Hiring a family member who is down on his luck or who can't seem to hold a job anywhere else is a recipe for poor morale.

 

 

 

 

8) Don't pay family members the same.

The default payment plan for many family businesses is to pay all next generation family members the same. After all, you love them the same, right? This is foolish. Every employee, family member or not, brings different talents, skills, attitudes, ambitions and capabilities. Family members, like everyone else, should get paid wages commensurate with what the market bears for the given position.

 

 

 

 

9) Avoid turning in-laws into outlaws.

Some family businesses view in-laws with a jaded eye. Shouldn't someone with the intelligence and good sense to marry your son or daughter also be judged to have the good sense to know how to work productively in a family business context? Why does it make sense to ignore the capabilities and talents of in-laws as potential employees and even business successors?

 

 

 

 

10) Get rid of morale killers.

It is sometimes necessary to prune the family tree. Several times a year we get calls from family business leaders who are wrestling with underperforming, sometimes incompetent, family members. The acid test question: "If this person were not your son, would you keep him on your payroll?" The answer almost always comes back a profound "NO!" Pruning the family tree almost always results in business productivity improvement. There are, however, usually family repercussions. See the point above about hiring a skilled facilitator to manage difficult family conversations.

 

Managing the intersection between family and business is quite difficult. These 10 tips will help you realize that delicate balance more effectively.

 

 

 

 

Source: http://blogs.wsj.com/experts/2016/05/03/10-tips-for-bringing-your-children-into-the-family-business/

 

 

 
My Big Idea: The Dubliner who's marketing frozen veg in a fresh way
Thursday, 19 May 2016 10:47
A man branching out on his own from a Family Business.
 
 
Sam Dennigan (30) from Oldtown in North County Dublin is the founder of Strong Roots, a new frozen sweet potato chip brand.For ten years I worked for my family's business, Sam Dennigan & Company, one of Ireland's biggest fruit and vegetable distributors.
 
 
I worked across all parts of the business, from market stalls to IT and eventually to sales and marketing, where I managed several frozen vegetable brands.
 
It was there I saw the opportunity for Strong Roots.
 
 
Frozen vegetables have always been marketed in quite a boring way and perceived as low quality by consumers, whereas lots of fresh vegetables are going through a sort of renaissance, with products like kale and courgette growing rapidly in popularity as shoppers become more health-conscious.
 
 
I realised there was a gap in the market for a frozen vegetable that was marketed like a fresh one.
 
Frozen vegetables are also a good option for a startup because fresh veg is so perishable that it limits your export potential. Frozen food can be held for up to two years.
 
 
I did a lot of research and travel to find a product that would work. I settled on sweet potato fries because sweet potato has soared in popularity in recent years - there's huge demand for it now - but preparing it can be tricky.
 
In my previous role I had managed procurement at one stage and had sourced a large sweet potato contract for a UK company, from a supplier in North Carolina in the US where a lot of the sweet potato consumed in Europe is grown.
 
 
The supplier said that the best way to get the freshest product was to finish it in the US and then ship it. The manufacturer didn't follow that advice but it stuck with me and I settled on that option for Strong Roots.
 
I was accepted onto the Bord Bia/SuperValu Food Academy acceleration programme in April of last year and officially launched the brand at the National Ploughing Championships in September.
 
 
Our first stockist was SuperValu. Normally companies that go through the Food Academy programme start out in 10 stores but because of my background in food and the fact that we had a lot of capacity from the beginning, we were stocked in 100 stores from the start.
 
By Christmas we were in all 200-plus SuperValus nationwide. At the end of March we launched in Dunnes and also have agreements with Hendersons and Musgrave in Northern Ireland.
The plan is to expand into the UK and we are working with two major British companies on that.
 
 
 
I intend to introduce more products, another made from sweet potato and two more from other healthy vegetables.
Vegetables like kale, beet, celeriac and avocado are the focus, ones which are not currently represented in the frozen food isle and are growing in popularity.
 
Five people work on the business now and we are growing fast. It's been fantastic.
 
I initially funded everything myself but that was only sustainable for so long, so we secured a line of credit from Bank of Ireland. Giving away equity may be on the cards to assist the company's expansion in the UK because it is such a big market.
 
I'm keen that we hire great people, and they tend to be expensive, so an employee stock option scheme may be looked at.
 
 
The biggest challenge has been getting used to running all elements of the business, from finance to HR to marketing to strategy to all the niggling little issues that come with running a start-up.
 
 
I was used to just looking after my own department, be it marketing or whatever. That shift has taken a bit of getting used to."
 
 
 
 
 
 
 
 
 
 
Young farmers often live under parental microscope
Thursday, 19 May 2016 08:47

Below is a short read on a Bob Tosh, a farm management consultant's background and some useful advice for not just farmers but for any family business out there.  

We hope you find it of interest...

 

 

 

I probably stopped paying much attention to my father's opinion when I reached 18.

 

Of course, I take a lot more notice of it now as I've become older and realize the value of his life experience.

 

However, back then I had left home, either working on a farm or attending agriculture college, and our worlds didn't come that close together. I went on to serve in the army, attend university, get married and have a family. I made my own decisions, made my own mistakes and moved away from the close proximity of my parents.

 

As an adult, I can't ever imagine having to ask my parents for money, have them scrutinize what I spent it on or ask permission to go on vacation or get a loan for a new vehicle. I also can't ever imagine my wife having to live and rear our children under the constant gaze of her mother-in-law.

 

And yet this is the reality for so many young farm families who stay on the farm to take over the business.

 

Cash is often tight, and it makes sense to build on the same yard as Mom and Dad or have Mom and Dad move off the yard to accommodate the next generation. Frequently, there is only one bank account, which is operated jointly.

 

And then there may be other things to consider, such as attitudes toward child rearing, money, alcohol, work and education, which may differ between generations and between families. How many times do I hear things like "they can't manage money" or "my son doesn't work as hard as I did?"

 

And yet the reality for most of the world is that the kids leave the nest so that they don't have to endure the constant judgment of their parents. True, they might still be exposed to an opinion or two, but they aren't living and breathing it on a daily basis.

 

I blame the "honeymoon period," which are the early days when everyone is getting along and decisions are made in the glow of family harmony. However, this only sets up families for failure later on.

 

There are three circles of the family business — family, ownership and management — and it's important to know in which circle decisions are being made. As well, no matter which circle you are making a decision in, remember that formality will always be your friend.

 

 

So before you build that new house on the yard, here are a few things to consider:


1. Set boundaries around the overlap between family and business.


2. Understand that everyone needs their own space.


3. Keep in mind that the children are also adults who need financial autonomy.


4. Recognize that your children won't simply accept that they are a source of cheap labour. They will want to manage the business sooner than you might want to let go of the management.


5. Accept that your new daughter-in law-might not react well to your input on child rearing or whether she should work off the farm.

 

 

 

Elaine Froese wrote an excellent book on the topic, called Farming's In-Law Factor. I would urge you all to read it, but do so before you've built that house next door.

 

Begin by reading the sections that apply to others and only later focus on the section that applies to you. This will perhaps help you understand other perspectives before simply looking to reinforce your own.

 

There will need to be compromise from all sides and an ability to communicate so that a difference of opinion doesn't become a personal insult. Don't set yourself up for failure. Put some rules in place before the first foundations are dug.

 

 

 

 

 

 

Source: Bob Tosh, a farm management consultant in MNP's Farm Management Consulting group in Saskatoon

http://www.producer.com/2016/05/young-farmers-often-live-under-parental-microscope/#.VzYWZyiQJGc.linkedin

 

 
The 4 Step Succession Plan
Wednesday, 18 May 2016 15:06

A family business is either at its weakest during succession, if the new owners are not fully equipped or untested, or on the brink of a brilliant new era. One thing is certain, the business cannot stay the same, even in the hands of blood relatives, and that's why it's important to plan the succession process to its best advantage.

 

Most family firm owners trust their own flesh and blood more than an outsider to take the reins when they have to step down, but that trust can still be a little unstable.

 

They want to know that when their business is handed over, the new management will govern their evolving legacy to even greater heights – not leave the business stagnant or worse, diminished.

 

Plan for Succession Success

If you fail to plan, then you plan for your business to fail in succession.

 

 

1. Evaluate Realistic Goals

Before you can accurately discern what you are expecting of a successor, you need to first draw up a clear idea of what you and your fellow owners expect from the business going forward. Are there specific goals and objectives you'd like achieved? Write them down and agree on them.

 

These can include business performance goals, as well as what the retiring family members expect the business to afford them after stepping down.

 

 

2. Document the Succession Plan in its Entirety

Identify every successor, from owners to managers of the business, and write down their exact roles and responsibilities. The succession plan must also serve as a clear timeline for how long succession will take for each role and how succession will be achieved.

 

When it is documented properly then there will be less minor disputes escalating into major ones and every family member can be clear on their path going forward – including what they need to do to fit into their new roles, in the case of the younger generation.

 

 

3. Clearly State a Governance Process

With different generations of the family now having a vested interest in the running of the business – and the older generation having the experience, but now the younger generation having the status – it becomes more important than ever to set out clear governance procedures.

 

Document everything from how certain disputes will be handled, to the succession plan itself with details of every family member's role going forward and make sure that every family member and stakeholder is on the same page.

 

It's important for the successor to know when they will have the support of key family members in business affairs, and what kind of support they can expect.

 

 

4. Detail the financial Implications of the Succession

Draw up an agreement for the sale of the business that is fair for all parties. It should reflect the worth of the business while also minimising the tax incurred from the transaction.

 

There are also different ways that the business can be legally handed over to the next generation, including the successors purchasing the business, or it being treated as a gift from the present owner to the new one. All this should be worked out as early on in the succession planning as possible so that all parties know what is to be expected in the eventual handing over of the reins.

 

The succession plan should state a clear plan for the transfer of stocks between family members in the hand over. If spouses of those involved in the company are stakeholders then it should also be stated here what say they will earn in the running of the business.

 

Make sure that your legacy only grows with the next generation of the business by ensuring that nothing is left unaccounted for in succession – this way both the present generation and the future generation can work together towards the same goals.

 

 

 

 

 

Need further Advice? Contact us now at Tel: 021 4320466 / Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it  

Source: http://www.kpmgfamilybusiness.com/the-4-step-succession-plan/

 
Family-owned firms 'better equipped to survive downturns'
Wednesday, 18 May 2016 09:06
Long-lived family-owned businesses are more resilient, on average, than rivals and that is in part because they have a longer term orientation and are better able to retain the lessons of past crises.
 
 
Family-owned businesses are the "social and economic backbone of all communities across the world", including Ireland, according to Dr Justin Craig, inset, Professor of Family Enterprises and Co-Director of the Family Enterprises Centre in the Kellogg School of Management, at Northwestern University, in the US.
 
He is among the key note speakers at this morning's launch of a report by Fingal Co Council and Dublin City University's Centre for Family Business entitled 'Lessons in Resilience and Success: A Snapshot of Multigenerational Family Businesses'.
 
 
The report has examined 12 Fingal-based multi-generational, family-owned businesses - including well known food producers Keelings, Wrights of Howth and Country Crest. It sets out their unique position in the marketplace and makes practical recommendations for their sustained growth.
 
 
 
 
 
 
Click here to read more: 
 
 
7 Reasons Why You Should Make An Enduring Power of Attorney
Tuesday, 17 May 2016 14:54

Thanks again to Neil J. Butler & Co for passing on this useful piece on a having a power of Attourney. We feel that this need to be circulated constantly as it is so important in any turn of events.

 

An Enduring Power of Attorney is a document in which you appoint who should look after your personal and your financial affairs in the event that you are unlucky enough, through accident or illness, to lose your mental capacity.It is only ever intended to become effective IF you lose your mental capacity at some future point in time

 

 

1. You decide who is to look after your personal needs, if required

 

 

2. You can also have your assets or business affairs taken care of in a structured way

 

 

3. You give yourself peace of mind , knowing these arrangements are in place

 

 

4. You can ensure there is no undue financial strain imposed on family due to your illness or disability

 

 

5. While a Will covers things after death , this document governs the period from mental disability to death

 

 

6. It does not activate until something profound happens to you

 

 

7. You can change it or revoke it at any time up to it’s activation, if you wish

 

 

 

 

 

Source: http://njbutler.ie/

 
'The real value is in implementing your plan - although that's easier said than done'
Tuesday, 17 May 2016 14:29

THE PROCESS OF developing a strategy for your company doesn't end with a beautifully crafted business plan that sits on your office shelf and is dusted off from time to time.

The real value is in implementing it, although unfortunately that is easier said than done. To be truly effective, the plan must become a part of the daily, weekly and monthly routines that drive the sales and marketing initiatives, production efficiency, human resource practices and so on in your business.

Here are 4 steps that can help with this process:

 

 

1. Summarise the plan on a single page

Your plan needs to be converted into something that is easy to have on hand, simple to reference and can be communicated effortlessly. An 80-odd page document is not easily referenced, it needs to be a single page that highlights the main areas of focus in the plan.

 

If that's the best approach. then why do successful companies go to the effort of producing these large documents, you may well ask. The answer lies in a Mark Twain quote: "I didn't have time to write a short letter, so I wrote a long one instead."

 

It's often easier to ramble on and tell you everything rather than deciding what is truly important and what your audience needs to know. The business plan is a great way for you to clarify your thoughts, consider all the steps and ensure that a holistic view is considered for the proposed actions.

 

The reality is that not all staff need to know the thought processes behind a current strategy, but they do need to know what is most relevant to them.

 

 

2. Set achievable targets and track progress against them

What gets measured, gets managed and gets done. Knowing that someone will be scoring your performance helps focus your attention. So ask yourself, "How am I going to keep the plan on track?"

 

Think of key performance indicators, or KPIs, as a way for a company to keep score. They help management understand if the company is achieving the objectives set out in the plan. Unfortunately, far too many companies think that standard financial KPIs are sufficient. They are not. KPIs should be driven from the strategy and thus are personal to each business.

 

Measuring the right KPIs and determining what actions you need to take to ensure that you meet your targets can elevate a company above the competition. For example, failure to meet a quality metric should lead you to ask why, discover that there is an issue with the supplier and ultimately source from a new provider.

 

 

 

3. Find the person who will lose sleep if it isn't done

 

If you want something done, you need to make someone responsible and accountable. Relying on a group disperses the responsibility and can lead to delays in decision-making and meeting the targets. Holding one individual accountable means that they will be focused on delivering their metric which supports the plan.

 

 

4. Communicate and make sure everyone is aligned

Staff need to believe in the plan if it is to be successfully implemented. They need to all be pointed in the same direction heading for the common goal. There is a long history of companies failing, despite having the right strategy, simply because they couldn't get the staff on board.

 

To do this, you need to communicate the plan and take the time to answer questions from staff. Make sure to address their concerns and seek their feedback. In short, ensure that they understand the vision for the company and their role in it.

 

Tom Early is a senior investment adviser at Enterprise Ireland, which is running a series of workshops for exporting SMEs on 'finance for growth'.

 

 

 

 

Source :https://fora.ie/readme/how-to-implement-a-plan-2768500-May2016/

 
Family Governance
Monday, 16 May 2016 15:36

The goal of family governance is to establish a sustainable family structure in relation to the family business. The main purpose of family governance is to define how a family-owned company is to be run once more generations get involved and/or more family members become active within the family business. It covers such questions as how business decisions are taken in such case and how the company's future strategy is to be set out. A good family office in Switzerland can assist you in putting a solid family governance code in place.

 

 

What does family governance mean?


The term 'family governance' is not immediately clear to most of us. The main aim of family governance is to cover how a family-owned business is run once more generations or relatives get involved in it. Family governance is therefore not an issue for public companies, but in a family-owned company it could be essential for the continuity of the business to put the right governance in place at the latest when, or just before, the next generation gets involved.

 

 

❝ How often do you sit together and discuss the family business? ❞


Family governance will not be an issue if you own 100% of a company yourself and your only child will take over the company (see succession planning). But if you own the company jointly with other relatives and each of you has children, you may very well imagine that the next generation of owners might not completely agree with each other on the way forward.

 

 

The complexity of operating a large family business


The more family members get involved in the business, the more their opinions can differ. This could result in a lack of consensus between the family members as long as no clear decision structure is laid down. How will the company strategy be decided on when the family members do not agree with each other on the way forward? How will family members who hold shares in the company, but who are not active in it, be financially compensated? How do family members communicate with each other? A Swiss multi-family office can play an important role in organising this potential trouble spot.

 

Additionally, good communication between the company and the (inactive) family members is of high importance. If this does not function well, the company, and its performance, could become paralysed. It could also have a negative impact on the relationship between the family members. And how will the company deal with potential threats to the business? All these issues are particularly problematic where part of the company shares are traded publicly.

 

 

The main components of family governance


Although there are no set rules, we usually see the following three components:  Family Governance overview

 

 -  A family constitution, in which the basic principles of the business and the family's policies and views are laid down.

 

 -  A family council - a council that represents all the family members vis-à-vis the company.


 -  Regular family assemblies, annually or twice a year, including information about the business, education of the younger generations, strategy of the company, potential changes of ownership, etc.

 

Family governance addresses all these topics and more. Most of the business-owning families find family governance a very difficult topic to address and a lot of family offices are not familiar with this topic at all. In case this topic is important to you, you should make sure to select a family office in Switzerland that has the necessary know-how and expertise to support you with putting the right family governance in place.

 

How we support you


If you have any questions about putting a family governance code in place and/or the selection of an appropriate multi-family office, please do not hesitate to contact us. We look forward discussing it with you.

 

 

 

 

 

 

 

 

Sources: http://www.switzerland-family-office.com/family-governance.html

 
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