Family Businesses Tips and Tricks

In Australia, today’s family businesses operate on a wide spectrum. These range from the small scale right up to global traders and brands. Whether you start out with a newsagency for sale or own a chain of international hotels, there are some unique considerations that characterise family owned or managed commercial enterprises.

For some, the mere notion of mixing family and business is almost as fraught as working with animals and kids. However, before you take the plunge with your nearest and dearest, be prepared in order to minimise conflict down the track. Read below for some of things to consider when you’re looking to begin a family business.

Documentation that outlines everyone’s initial buy in or investment and split of ownership is essential. This is especially given that contributions and ownership can be defined and proportioned differently than in your average company. The protection and happy cohesion of the family unit may in fact become a business goal that is prioritised.

There should also be exit clauses and processes that are followed in the event that one or a few parties want to exit a business agreement. Of course, these may vary over time and should be updated when circumstances evolve. If you don’t happen to have a lawyer in the family, consulting a family business adviser can be a good way to put a formal structure around the initial set up of your enterprise, even if you intend to operate quite flexibly.

Many issues in family run businesses result from a misunderstanding of the complexity of having emotional and rational factors at the core of an investment. A top-down management style with the patriarch traditionally at the helm still works in many family businesses. However, the roles and configurations of today’s families vary greatly. Therefore, this evolution needs to be addressed within your business, including a consideration of the value that family members contribute outside core business functions.   Decision making processes are also influenced by the family unit, even if related individuals are not personally involved. Therefore, be aware that the gains for a family as a whole often factor into business decisions. Another challenge can also be the sharing of information, so have a clear process of what information is transparent to whom in the family, especially if family members occupy a variety of levels within your business.

A family business is very marketable in today’s retail environment. The actual DNA shared by those in the family business is a strong selling point for future investors and customers. Today’s tech savvy customer responds well to the authenticity that a family business provides, making your story a strong branding strategy that isn’t available to many of your competitors. Furthermore, the popularity of small batch consumables and boutique services in Australia reflects a market demand for unique and local goods and services, especially in comparison to the faceless corporations. Therefore, be sure to capitalise on the fact that your venture is family run to establish a strong business identity.

*This is a collaborative post.