This is April’s edition of a column I write in QBR’s “Australasian Bus and Coach” & “Australian Transport News ” As Advisers to family groups in business, it cannot be reinforced enough how important formal or informal communication is for the wellbeing of their business and family. I have included a few tips below and always welcome your questions – David Harland, Managing Director, FINH
Communication is key to a healthy family business. Businesses at every stage of development have critical issues ranging from formalizing business structures to succession that must be discussed and resolved. Coming to terms with the need to formalize business relationships and have important conversations is a big step towards safeguarding the future of a family business.
Every family business is different, but most have unresolved issues that can cause disputes between family members and prevent important decisions from being made. Succession is one of the issues of greatest concern to the families we see at FINH. If your business does not have a designated successor, or if there are multiple people vying for the position, it is critically important to open that conversation. Who will be taking over the business? How will a successor be chosen and groomed for the position?
The structure and finances of the business are another area which can create problems when there are multiple generations or family relationships involved. Many businesses start out with a minimal legal framework which can be quickly outgrown as the business prospers. The legal and financial structure of your business becomes especially important when discussing expansion or succession plans. What structure should the business adopt? What formal roles should each family member take?
Entry and exit expectations for family members can be a source of friction and frustration in a family. Some members may view the business as an extension of their family, and are comfortable welcoming other family members into the business. Others may consider it first and foremost a business and want to treat family the same as outside applicants. It is critical for key stakeholders to be on the same page with respect to who can work in the business and what expectations exist.
Why family business conversations need to happen
Communication is one of the most critical aspects of a successful multi-generational business. Different personalities, competing goals, and power dynamics can cause family members to butt heads and make decision-making a fraught process. However, unresolved conflicts and unmet expectations can put your business at risk or worse, threaten family relationships. Effective communications and conflict resolution strategies can build closer relationships and drive progress in your business. Regular family conversations are critical to addressing issues before they reach crisis level and to maintaining a healthy family business.
Starting hard conversations in your own family
Hopefully, you’ve realized the importance of addressing the big issues that never seem to resolve themselves within your family business. In order to get the ball rolling, here are a few tips on how to start those important conversations with your family:
Practice difficult communication before tackling crises or critical issues. Start by initiating low-stakes conversations that are only slightly uncomfortable and iron out the kinks before moving on to the really difficult but important topics.
Schedule time in your family and business calendar for dedicated talks without interruption. Don’t overload the agenda with too many topics; instead, choose one or two important issues to explore at length. This is particularly important with large family groups to ensure that everyone has a chance to speak.
Set ground rules for family meetings, and give every member – junior and senior alike – the same amount of time to speak. This might be especially difficult for senior family members who are accustomed to discourse at length, or for junior family who are not used to giving opinions; however, it is important for all family members to feel equally included in the discussion. To encourage discussion, institute a rule that silence implies consent – if you don’t speak up, everyone will assume that you agree with what is being decided. When tempers run hot and emotions take over, it’s a good idea to take a time out and regroup later once everyone has had a chance to calm down.
While family conversations can be difficult to start, they are critical to the health and future of your family business. While it can be hard to believe at time, your family is normal and there are many others in the same boat. Families are strong – they can withstand fights and grow and learn from disagreements. What’s important is an open and honest dialogue between key business stakeholders.