The days of casually-operated family businesses have come to an end. In order for a small business to compete with large, commercial corporations, successful family businesses have turned from a casually run operation to a small empire run by a board of directors. Some of these savvy businesses have now also jumped into a new trend: creating a Family Business Council or FBC.
Keep in mind however a board of directors and an FBC are two entirely different things.
The FBC Difference
A Family Business Council is structured more like an open forum and is used to directly resolve issues within the family that are critical in terms of the success of the business. Since often the line between family and business gets blurred in a family-run operation, the FBC provides an open setting where members of the business and family can resolve issues that if left unresolved can lead to confusion, stress and even a business’s downfall.
How an FBC Structures Your Business
If you structure a Family Business Council for your small business, it is important to create a foundation of policies that will resolve potential issues that may arise later. Some common policies created within an FBC include:
- Authority and Responsibility – Create a clear definition of who holds what authority and who is responsible for what positions in the company as well as the FBC. Each individual should have a set list of expectations, responsibilities and a clear definition of what their authority entails. In the end, everyone involved in the business and the FBC should be clear on who they report to and what they do for the company.
- Work Hours and Vacation – A set number of work hours/days as well as vacation provisions per family employee should be created as part of the Family Business Council’s policy.
- Office Life – Members of the company should have a clear definition of where their office or workspace is, what work items they will provide on their own and what items belong to the company – family or not.
- Compensation and Benefits – A detailed pay structure must be created that outlines each member of the company and how much he or she receives in terms of compensation as well as healthcare or retirement benefits.
The Family Business Council should create all of these policies using an “open forum” technique so that no family member or non-family member of the company feels favoritism comes into play in terms of company policy.
Getting an FBC Started for Your Small Business
You can grow your business using both a board of directors and a Family Business Council. Businesses that do not operate with a board of directors should still use an FBC in order to create a fair operating structure for their family-run operation. The initial meeting of the FBC should be hosted by a business consultant who is not related to the business owners or directly associated with the business in any way. Ensure that the business advisor uses the first meeting to:
- Create an environment based upon mutual agreement and trust amongst all family members involved in the business.
- Give all members of the FBC a chance to share opinions about business operations and bring up any underlying business issues they have.
- Give the key family members within the business a chance to define goals for the company overall, listen to issues and reconcile any family disputes that may be directly effecting the company.
- Provide assistance to family members when it comes to defining authoritative roles, relationships and the responsibilities of all company employees.
The Bottom Line
A Family Business Council is a fear-free environment – meaning anyone who attends has the right to speak their opinions without fear of backlash, disagreement or future punishment. It is important for each family member to speak his or her mind in regards to the business operations until the entire group comes to a consensus. By doing so you will grow your business, but also grow your family trust and structure within the company.