Family Business Governance
Clear governance structures, policies, and systems will help your family business achieve and sustain business prosperity as it enhances communications and decision-making.
At MJM Financial Advisors, LLC, we will work with you to create an effective board of directors or advisory board, a strong leadership team, and guiding policies and protocols. We can also facilitate your meetings so that you can get to the real issues and discuss them in a productive forum. We can help you decide on who should be involved in family meetings, how often, where meetings should be held, and what should be discussed to maintain family and family business harmony.
The lack of good governance in a family business can be a recipe for disaster. Without governance, family businesses lack direction and key family members are deprived the opportunity to learn and provide input about the business. Without governance, family dynamics may turn board meetings and-if there are no appropriate boundaries set beforehand-weddings, holiday gatherings, cookouts, and birthday parties into events where family members express their views on their stake in the family business.
Good governance will carry a family business through the three stages of development in a family business. It is most important once the second generation gets involved.
- First Generation Ownership. First generation family business owners typically are the only governance system, though they may utilize an advisory board as a sounding board for important business decisions.
- Second Generation Employment. Once the second generation becomes employed in the business, dynamics begin to change. This is particularly true if the next-generation employee might acquire an ownership interest in the business. This is the point at which governance issues will need to be considered.
- Second Generation Ownership. When the second generation gains ownership of the family business, roles will begin to separate. This is particularly true if some sibling-owners are active and others are not active in the business. Formal governance structures may be required.
Contact us to learn how we can provide solutions for your family business.
More information about family business consulting coming soon in these areas:
