Key things to consider when setting up a family business
Common challenges when starting a family business such as allocating shares, job roles and ensuring good communication.
Setting up a family business can be an exciting challenge. Before you go ahead, consider how to deal with 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.
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