A family business is a commercial organization in which decision-making is influenced by multiple generations of a family—related by blood or marriage. These families are closely identified with the firm either through leadership or ownership. Studies show that family businesses account for two-thirds of all companies worldwide and create 50 to 80 percent of jobs in most countries, according to the Family Firm Institute, a global association of family-business professionals. That's substantial! This isn’t just good for the economy, family founders stand to benefit from a readymade team of loyal, dedicated relatives, a pool of obvious successors and the ingenuity of the next generation.
Some Nigerian family businesses include:
● The Murray-Bruce’s Dominos stores.
● The Ibru’s business chain of The Guardian Newspaper, Sheraton Hotels and Suites and Four Point Hotel, etc. Here are some general principles to employ in building sustainable family businesses:
1. Get everyone on the same page.
For a company to succeed, relatives who take leadership or support roles need to respect and abide by the overriding business goals—for example, company policies and values. Identify what your business stands for and communicate this clearly to each family member-employee.
2. Clarify roles and responsibilities.
Boundaries are essential when working with family. The more clearly defined everyone’s job description, the less room you’ll have for workplace conflict and the more obvious it will be when someone slacks off. Outlining clear-cut roles also can help avoid needless personal squabbles with loved ones.
3. Set up an equity plan from the beginning.
Highest decision-making members should outline who will own what percentage of the company from day one. On structure that can be used is that where the person who invests the most money gets more equity. Sorting this out and putting it in writing at the outset will be useful a couple of years down the line when family members who’ve helped build up the company from nothing feel entitled to equal equity even when they did not make any monetary investment.
4. Treat relatives like any other employee.
Handling blood relations in the workplace with kid gloves can be dangerous. Put them under another person who is not a family member, or in different departments to reduce conflicts and so they have somebody other than a family member telling them what to do. They are accountable to such a supervisor who in turn reports to higher up family members. Empowering staff to manage your relatives is easier said than done, and so, it must be done with much care to avoid damage to the business or to family relationships.
5. Separate work and home life.
Leaving work at work is a challenge for any employee, not to talk of living with your cofounder or spending holidays, birthdays and summer barbecues with them. To avoid feeling like they’re on the job 24/7, you can put in place a “no office talk” rule on a particular day. Having a process for airing work-related concerns and grievances with family members is essential, too. This content was produced for the LSETF by DIYlaw
6. Outline your succession plan.
This is one of the most important things to consider. A family business without a succession plan will die out as soon as the original founder does. It’s never too soon to think about how you’ll exit the business and who you want to take the helm when you do. Creating a viable succession plan requires a team of experienced advisers, including an accountant, a financial planner and an estate-planning lawyer - an impartial business consultant who knows the family and isn’t afraid to point out the issues you may not want to hear can be helpful, too.
7. Groom the next generation.
Family business founders that fail to build enduring structures or equip their successors are setting the company up for collapse. The implication is that when they die or cease to run the business’ operations, their children have no straws to hold on to; they start guessing, and with time, the whole thing collapses. This can be prevented by ample hands-on trainings and shadowing practices.
