The 10 most important best practices for family businesses

Everyone in a family business knows, either first- or second-hand, just how painful it can be when conflicts of personality and management decisions arise.

The majority of family businesses suffer financially when they don’t follow these best practices. So why don’t they do it?

Trading disaster tomorrow for harmony today

The reason is simple, but just because it’s simple doesn’t mean it’s easy. Children should be treated fairly, but that doesn’t mean they get treated the same: we’re all different. The opportunities they’re given shouldn’t be identical, but they should be equally valuable to them. If one child becomes CEO and gets a bigger salary and office, don’t fake a new title to make another child in the business seem the same. Even things up with dividends.

There. That’s all the family advice you’ll need. Now, mom and dad, see it through.

The 10 Commandments of family business

  1. Develop planning discipline: Provide direction to reduce uncertainty
  2. Listen to your advisory board: You can’t see your own blind spots.
  3. Enforce a code of conduct: The strength of humility and responsibility
  4. Set hiring and compensation rules: Fair and better for everyone
  5. Keep current savings and estate plans current: People worry about money.
  6. Publish the succession plan: You can’t put this off.
  7. Put buy/sell agreements in place: Things change. So do people
  8. Run regular business valuations: Reality only hurts at first
  9. Adopt standards and best practices (The Index of Terms): Reinvention breed useless debate
  10. Celebrate: Keeping your story going!

Relevant Terms

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