Owners often postpone discussing how to address the issues that arise in a family business, such as employing relatives, succession planning, buy-sell agreements, loaning money, compensation, etc., in order to tend to the day-to-day running of their business.
     When it comes to having a family business, having rules in place can help the family business run professionally.  Creating a set of rules up front will help separate the business from the personal.  Here is a non-exhaustive list of topics that should be considered:
Family Board
    • Role of the Family Board (who/what does it direct)
    • Rules about non-bloodline family members joining the board
    • Voting system (simple majority, weighted voting, etc.)
    • Roles of independent advisors to help the family board
Family Investments
    • Asset allocation strategy
    • Decision process on family investments
    • Investments in new business opportunities proposed by family members or 
       others
    • Decision process on family investments
Employing Family Members
    • Educational requirements
    • Age limits
    • Will the business be considered a “shelter” for family members in search of a 
       job and if so for how long?
    • How far reaching will the family employment be – immediate family, in-laws,
       grandchildren, etc.?
Family Compensation
    • Same for everyone or adjusted for role/years in the business?
    • Should loans be provided to family members, under what circumstances, 
       and with what terms?
The list goes on.  Addressing these questions can avoid problems.  A typical family
employment policy might include:
    • The driving force behind our decisions should be the best interest of the
       organization and not that of the individual family members.
    • A job at the family business is neither a birthright nor an obligation for the family
       member.
    • Once hired, family members will be treated as all other non-family employees.
    • There is no guarantee that family employees will be promoted to top 
       management positions simply because they are family.
    • Family employees are expected to set the example as far as dedication, 
       performance, and conduct.
    • The Business cannot afford to carry individuals, whether family or not, who
       do not make a full contribution.
     Business owners need to set up rules to separate business from personal matters.  A written protocol will help guide them as issues come up and can prevent problems and hurt feelings in the future.  In addition to avoiding problems, a well crafted protocol will make non-family members more comfortable working in the family business.