Family businesses are the backbone of the economy, accounting for a significant portion of jobs and GDP. However, they also face unique challenges due to the intersection of family dynamics and business objectives. Governance is essential for small family businesses to thrive, providing structure, clarity, and cohesion.
Why is governance important for small family businesses?
- Improved decision-making: Governance helps family businesses make better decisions by providing a framework for inclusivity, transparency, and conflict resolution. This is especially important for small businesses, where resources are limited and mistakes can have a significant impact.
- Reduced conflict: Governance can help reduce conflict within family businesses by establishing clear roles and responsibilities, and by providing a forum for family members to discuss and resolve differences constructively.
- Enhanced sustainability: Governance can help small family businesses become more sustainable by ensuring that they are well-managed and that they have a plan for succession. This is essential for businesses that want to pass from one generation to the next.
Tips for implementing governance in small family businesses
- Start small: Don’t try to implement a complex governance structure overnight. Start by focusing on the most important areas, such as defining roles and responsibilities, and establishing a process for making major decisions.
- Be flexible: Your governance structure should be flexible enough to adapt to the needs of your business and family. As your business grows and changes, so should your governance structure.
- Get professional advice: If you need help implementing governance in your family business, consider working with a professional advisor. An advisor can help you develop a governance structure that is tailored to your specific needs and can provide guidance on best practices.
Here are some additional tips for small family businesses:
- Involve all family members: It’s important to involve all family members in the governance process, even those who are not actively involved in the business. This will help to ensure that everyone feels respected and valued, and that the governance structure reflects the values of the family.
- Communicate regularly: Communication is key to successful governance. Make sure to communicate regularly with family members about the governance structure, and about any changes that are being made. This will help to ensure that everyone is on the same page and that there are no surprises.
- Review the governance structure regularly: The governance structure of your family business should be reviewed regularly to ensure that it is still meeting the needs of your business and family. This is especially important as your business grows and changes.
By implementing governance and following these tips, small family businesses can create a solid foundation for success and thrive across generations.
Also read: Top five challenges for Australian family businesses in 2023
