Family businesses come in all different shapes and sizes and account for 70% of all businesses in Australia.
Like all businesses, a family business can have advantages, such as flexibility, and disadvantages, such as family conflicts.
A family business* is defined as a business where:
the majority of votes are held by the person who established or acquired the firm (or their spouses, parents, child or child’s direct heirs); and
at least one representative of the family is involved in the management or administration of the firm.
For family businesses who are listed companies:
the person who established or acquired the firm (or their families) possess 25% of the right to vote through their share capital and there is at least one family member on the board of the company.
* The businesses may be sole proprietorships, partnerships, corporations, or limited liability companies.
Top 10 tips for family businesses
To help your family business run smoothly, the Australian Small Business Commissioner (ASBC) has put together these top 10 tips for running a family business:
Leave work at work and home at home.
Have clear roles for each family member.
Pay the award rate to all family members who work there.
Use outside advisors for unbiased advice.
Have a good management structure - don't confuse ownership or inheritance with management.
Be open with communication - both good and bad news must be shared.
Clearly outline the entry and exit conditions for family members involved with the business from the beginning.
Develop a succession plan and make sure that all parties agree on the transfer of ownership.
Hold regular meetings and family 'retreats'.
Use mentors and family business forum groups as a sounding board.