Perhaps you began your business so you could work from home, spend more time with the family or build something up for the children. Whatever the reason you will want to make sure the business continues to thrive in the future when you're not around to run the show.
But in most cases the family business you so lovingly established and nurtured will only continue to succeed if everyone else in the family knows what the business is about, why you started it and what the objectives are.
Too often family businesses in New Zealand do not survive through to the second and third generation. Conflicts are common and, in addition to inadequate planning, often lie at the heart of the relatively high failure rate of small family businesses.
You need to define and explain your business so your children and other family members understand and appreciate the reasons for the sacrifices being made in the quest for ongoing business success.
The family business charter, or constitution, offers a good way to do this. It is a mechanism to assist the family in achieving its objectives. If you have not written one already for your family business, now is a good time to start.
State your dream at the beginning
Ideally a family charter is written when you are forming the business. That is when you state your dream, what your objectives are, and how this business will deal with pertinent issues relating to external management, family disputes, succession and so on. The constitution would outline:
# The objectives of the family.
# How the objectives interact with the business plan for the family business.
# How to deal with family disputes.
# The succession plan for the owner â€" both short term, in the event of an unforeseen circumstance, and long term; relative to retirement planning.
# Management issues and the family's position on employment of external management personnel and external directors.
# The appropriate standards of performance and administration for the family business.
# A standard of conduct and commitment of family members to the business.
# Ongoing management training and skill development necessary for family members to enable them to progress in the management of the family business.
# How regular family meetings are to be held.