There’s something appealing about a family business – the idea of passing the torch to the next generation to continue building on the foundation one person has laid down. But family businesses can also be fraught with conflict. Here are some ways to make your family business work, and work well.

Anticipate and deal with conflict
‘There’s a misconception that family businesses are rosier,’ says Rolland Eboru, family business specialist and Managing Executive at Fred Footwear. ‘However, managing a family business is equally or even more challenging than a non-family business.

‘In a non-family business, you have a predefined role and mandate, you work regular hours, and you clock in and out,’ he explains.

‘In a family business, there’s seldom a start and stop to your responsibilities. Also, there is more emotional involvement because it’s your family, which means there’s bound to be conflict. It can be very difficult to take a hard line with family members.’

Evolve and grow
‘Most family businesses aren’t started for the next generation but are based on the core competency of the founder. As the founder’s passion for the business deepens, they might begin to see it as an opportunity to pass on a legacy to someone in the family.’

If this is the case, they should involve more family members at an early stage. ‘Get them confident in the business and their passion for it may grow naturally,’ says Eboru, but cautions that expectations need to be managed upfront.

Define roles and responsibilities
Business consultant Teboho Seretlo agrees: ‘Families often don’t formalise business structures. Start by defining how you’re going to operate. If you don’t, it may cause discomfort along your business journey.

‘It doesn’t have to be perfect, but it should define the business – who will be responsible for what and what each person will be paid. It should even state how share ownership is distributed and what happens if someone wants to exit,’ Seretlo explains.

Eboru concurs: ‘Establish structures that will continue beyond your lifetime. There’ll be tough conversations and it will help if you can refer to the family values or principles that were agreed to at the outset. Having things in writing is also helpful.’

Be professional
‘In some cultures, the respect that is automatically given to older people can cause problems,’ says Seretlo. ‘Families must remember that this is about work, business and the legacy. It’s about who must deliver what, so age doesn’t necessarily determine seniority, which may give rise to uncomfortable conversations.’

Eboru advises that families in business be transparent, increase communication and ensure that agreements have been established to manage different members’ contributions.

Money matters
Another important issue is what people are paid. Eboru points out that there may be times when your remuneration is negatively affected. ‘If you’re an executive in a non-family business, your remuneration is defined contractually and you will receive the agreed-upon salary every month,’ he explains.

‘In a family business, this isn’t always the case. You might be performing well, but the business may not be in a financial position to remunerate you consistently, so you might have to make sacrifices.’

Capitalise on connection
There are perks to working with people you know and trust, though. ‘You share a value system and upbringing, possibly even a similar work ethic. Those similarities make the business less of a headache than with a non-family member,’ says Seretlo.

‘You also have the opportunity to be part of a generational legacy,’ says Eboru, ‘and you get to be your own boss, working in an environment that you’re interested in.’

Build a succession plan
‘You do need to have a succession plan and make sure that the generations after you are active in the business,’ says Seretlo. ‘This is critical. You will need to have regular conversations about who will succeed you and what your children’s ambitions are. They might not want to take over, and it’s vital these matters are discussed.

‘It can be rewarding to have a family business, but you must formalise the necessary processes,’ says Seretlo. ‘Dot the i’s and cross the t’s so that everyone is on the same page.’

This article originally appeared in Today magazine, Issue 1 2021. Read the latest issue here.