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How to run a family business without ruining relationships

Around two third of businesses in the UK are family owned, and while looking after your own is an admirable quality, working with people you also spend much of your life with doesn’t come without its problems. Having some boundaries and clear guidelines can help to overcome some common issues.

First of all, there needs to be an aligned vision about where the business is going. This should be a formal procedure, not just a quick chat over the dinner table. A detailed strategy, shared ethical and cultural values, a detailed business plan and absolute clarity on all financial and commercial aspects of the business are essential.

There also needs to be a real clarity of roles. They should be formally assigned, just as you would if you were recruiting for a position. People need to play to their strengths, and not just take up a role because it seems glamorous or more powerful. Non-executive directors who aren’t members of the family and have valid experience are essential to help ensure the business is managed with proper corporate governance and business ethics, and that people are performing as they should within their assigned roles.

There needs to be collaborative decision making as far as is possible – what you really want to avoid is someone saying: “This is my business, my decision is final”. The non-executive directors can help here, but there also needs to be an understanding among family members that no one person will pull rank. Start as you mean to go on and make sure that this doesn’t become part of the culture.

Of course, there will be times when someone needs to have a final say, and if that happens and the outcome isn’t favourable, then there should be a learning and process review to identify where things went wrong and if anything needs to change. Family businesses are like any other – things can go wrong, regardless of how many safeguarding procedures are in place. What’s important is everyone being open to review and collaboration, and not insisting on being above scrutiny.

When you bring people into senior roles who aren’t family, be absolutely clear with them about their level of responsibility and authority, as well as those of the family members within the business. You really need to avoid situations in which leaders are constantly undermined by people junior to them just because they happen to be a member of the family. They may be there because they inherited a role, but if they can’t perform, they should be trained until they can, or given a role where they aren’t making business-critical decisions.

There are also generational differences to consider. Not everyone will want to be part of a business just because their parents or grandparents were. Don’t assume this to be the case, and make sure the business planning and talent succession takes this into consideration. Family businesses with unenthusiastic younger members are ripe for takeovers below market value. However, with careful succession planning, a welcoming culture and a positive business model, you can build something that people want to be a part of – Specsavers is a wonderful example of a family who’ve done just that.