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If you start or join a family business, you'll likely gain some advantages that you often won't find in other companies. On the other hand, you may face issues with family-run businesses.

Advantages of family businesses

• Common values — you and your family are likely to share the same ethos and beliefs about how to run a business. This will give you an extra sense of purpose and pride and give your business a competitive edge.
• Strong commitment - building a lasting family business makes you more likely to work harder to succeed. Your family is more likely to understand that you need to take a more flexible approach to your working hours.
• Loyalty - strong personal bonds mean you and family members are likely to stick together in hard times which can contribute to the long-term success of the business.
• Stability - knowing you're building for future generations encourages the long-term thinking needed for growth and success - though it can also produce a potentially damaging inability to react to change.
• Lower costs - family members may be more willing to make financial sacrifices for the sake of the business. For example, they might accept lower pay to help the business long-term or they might defer wages during a cash flow crisis.  You may also find you don't need employers' liability insurance if you only employ close family members.

Disadvantages of family businesses

• Lack of skills or experience - some family businesses will appoint family members into roles that they do not have the skills or training for. This can have a negative effect on the success of the business and lead to a stressful working environment.
• Family conflict - conflict can arise in any business. But, in a family business, disputes can become personal as the staff are working with the people closest to them. Bad feelings and resentment could destabilise the business' operations and your family.
• Favouritism - can you be objective when promoting staff and only promote the best person for the job whether they are a relative or not? It is important to make business decisions for business reasons, rather than personal ones. This can sometimes be difficult if family members are involved.
• Succession planning - many family business owners may find it difficult to decide who will be in charge of the business if they were to step down. The leader should determine objectively who can best take the business forward and aim to reduce the potential for future conflict. This can be a daunting decision.

For further information see employing family members.

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.

Getting the right 91Ï㽶»ÆÉ«ÊÓƵ is central to making your business a success. There are a number of organisations that offer 91Ï㽶»ÆÉ«ÊÓƵ specifically for family-run businesses.

• is a not-for-profit membership organisation that 91Ï㽶»ÆÉ«ÊÓƵs and represents the United Kingdom's thriving family business sector.
•  is an online resource centre and magazine for the global family business community. It includes a regional section specifically focused on Northern Ireland.

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

Northern Ireland business 91Ï㽶»ÆÉ«ÊÓƵ finder

The Northern Ireland business 91Ï㽶»ÆÉ«ÊÓƵ finder is a searchable database that can help you find publicly-funded and not-for-profit sources of business assistance you may be eligible to apply for. Support may be available in a number of forms, including financial assistance and free or subsidised advice services.

The potential for conflict in family businesses can be greater than for other businesses - typically due to a clash between commercial and emotional concerns.

However, conflict can be seen as a challenge - or even as a positive driver for change. For example, a disagreement between family members on the strategic direction of your business may result in a much-needed rethinking of your business plan and a new agreed vision for the business.

Such outcomes, though, are only possible if techniques for avoiding, managing and resolving disputes have already been established.

How to avoid conflict in family businesses

Think about how people in your family business communicate with each other. Are emotional issues kept separate from business discussions? Are mechanisms in place to allow all employees - not just family members - to contribute their views? Or does one person tend to dominate?

The best way of avoiding conflict is to prevent misunderstandings from happening in the first place. Drawing up a family constitution can help you achieve this.

Plan how you'll deal with conflict and disagreements and set this out in the family business constitution, for further information see: 

• create a successful family-business constitution
• managing conflict

Holding a meeting of the business' management may be appropriate for addressing relatively minor disputes.

For more serious matters you may want to involve an independent third party - many family businesses benefit from having a non-executive director or business adviser - to act as an impartial mediator.

91Ï㽶»ÆÉ«ÊÓƵs parties dealing with change, contention, conflict and difference to find acceptable and non-violent agreement.

Good communication can prevent misunderstandings and disputes in family businesses. Without it, the risks include that:

• family members assume they know what other family members feel or want
• personal ties prevent honest opinions being expressed
• the head of the family may take control of the business, even if they lack skills
• one family member could end up dominating the business
• family-member shareholders who aren't active in the business may not understand the goals of those who are, and vice versa
• personal resentments become business resentments, and vice versa
• non-family board or management members feel excluded

Five tips to improve communication 

To 91Ï㽶»ÆÉ«ÊÓƵ open, honest discussions, where all family members feel safe voicing their concerns, consider these tips:

1. Separate personal and business issues

   Hold all meetings in a work, not home, environment. This will remove personal issues from business discussions.

2. Encourage constructive feedback

   Create ways to give constructive feedback. This can help prevent non-family staff from feeling demotivated and uninvolved.

3. Organise away days

   Hold occasional away days to discuss the business strategy and direction without daily distractions.

4. Implement impartial supervision

   Appoint a non-executive director or create an advisory board. They can provide an impartial view and help keep emotions from clouding business decisions.

5. Create a family constitution

   Develop a family constitution creating policies that will guide the family's relationship with the business.

Remuneration needn't be a thorny issue for family-run businesses. It's a good idea to have a remuneration strategy which is consistent, fair and open.

Resentment and conflict tend to occur when these three attributes are missing - for example, if family staff members are paid more than non-family employees without good reason.

Family members who hold shares but who aren't active in the business may also question the remuneration of those who are.

Develop a remuneration strategy for your family-run business

• When creating a remuneration strategy for your family business, consider the following:
• An individual's pay should be based on their value rather than their personal need. Look at what the market rate is for the job.
• Avoid attracting family members into the business with inflated salaries. Likewise, they don’t have to accept unreasonably low wages to demonstrate loyalty.
• Set clear criteria for benefits, bonuses, and incentives.
• Prevent the use of unreasonable high salaries and fake jobs to transfer tax-deductible wealth to family.
• Agree on post-retirement remuneration plans before they come to play.
• Non-family employees doing the same work as family members should receive the same remuneration.

It's important that your remuneration policy is seen to be fair and objective. Write it down, be open about it and review it regularly.

For further information see set the right pay rates and employing family members.

Advice from an outsider - an HR consultant, for example - can be invaluable in avoiding remuneration disputes.

A family-business constitution - sometimes known as a family charter or family protocols - is partly a statement of general principles. It outlines your business' core values and vision, and your family's commitment to them.

It helps successfully manage conflict in a family business, and a well-drafted document can even prevent conflicts before they start.

Importantly, it is a practical guide for running the business and a framework for handling family issues that may cause disputes.

The process of drawing up a family constitution should be a team effort. It should involve everyone with a stake in the business. The document should be regularly reviewed.

How to structure the constitution of your family business

A typical family-business constitution might include the following sections:

• business goals, vision and values
• leadership
• rights and responsibilities of shareholders
• management structure
• entry principles for family members
• criteria for succession
• exit policies
• rights, responsibilities and obligations of family appointments - pay, incentives, performance management and reporting lines
• rights, responsibilities and obligations of family members not working in the business
• appointment and rights of non-family board members, management and employees
• training, remuneration and appraisal of employees - both family and non-family
• developing the next generation
• involvement of non-executive directors and other outsiders
• communication channels
• dispute-resolution procedures

How best to pass on your business to the next generation will be one of the biggest challenges you face. You need to make the right decisions for you, your family and your business - balancing the needs of all three.

It can be made easier if you plan the succession process early - ideally when you set up the business.

Family business succession plan

Your succession plan should include:

• your key goals for the succession process
• a timetable of the transition stages, from identifying a successor to the staged and then full transfer of responsibilities
• contingency plans in case the unforeseen happens, such as your intended successor declining the role

Questions you should ask yourself include the following:

• Does my intended successor have the right skills and abilities?
• Does my intended successor actually want to take over?
• Is my plan fair to all family members?
• Does it minimise the potential for conflict?
• Will family succession be tax-efficient?
• Is family succession the best option or would an alternative exit strategy - such as a trade sale or management buy-out - be a better option?

For further information, see selling or passing a business to a family member and consider your exit strategy when starting up

Read our local case study on succession planning in a family business with Eugene McKeever, Managing Director of the McKeever Hotel Group.