Family businesses vary in size and in a multitude of other platforms. Every family business ‘situation is different one from the other.

The most successful people in life can admit that they don’t have all the answers. They seek knowledge and insight from wherever they can get it. Having a board of advisers is a lot like having coaches. A good board of advisors is a significant competitive advantage to most family businesses.

Many considerations come into force from family business owners when selecting the path of a board amongst which;

• Will I lose control if I have a board?
• Do we have to be bigger before we have a board?
• Am I ready to answer to someone I am not related to?

There are no right answers to these questions because every situation is different. The mere fact of asking questions means the family business owner is ready to take the next step.

Family businesses can be insular, relying on directions of family members or a few highly trusted long-time employees. Opening up to outsiders can be a cultural hurdle to clear. Different generations of the family business may not be comfortable with this idea. It will be up to the family business leader to listen to these concerns and help the other family members see how a board can actually strengthen the business and professionalize its operations for generations to come.

As a business leader, one is immersed in the day-to-day of company’s operations. A board can help the family business see a more complete picture. The board will help the family business chart a more strategic direction – one that is difficult to spot in the daily grind.

While strategy is a key advantage of a great board, there are countless theories. A board can help with industry connections, be a neutral arbiter between family members, provide a check on business practices and hold the CEO accountable.

Holding the CEO accountable is one of the most important aspects of board governance. A family business leader has trouble getting independent feedback. No matter how open the family business leader has made the culture, there will still be some hesitation to voice the necessary concerns. A good independent board is just that — independent and able to provide untainted feedback with no agenda.

Broadly we are discussing boards of advisers here, not a board of directors. A board of advisers is there only to advise. Family ownership of the company does not change, nor does control of the decisions. The only change is that you get the benefit of other perspectives. You can work around this objection by educating the family shareholders about the role of the board and how it will help.

At the Family Business Office we can offer you assistance in dealing with family business succession planning issues through incentives supporting advisory and mediation services. Contact us today on familybusinessact@gov.mt.

 

( All factual and statistical information presented in this blog has been obtained from an extract of an article from the familybusinessmagazine.com ) Follow us on our Facebook page and Family Business Office website at www.familybusiness.org.mt