Research by Charles Russell Speechlys and Family Business Place carried out amongst more than 300 family businesses last year revealed that 90% of UK family businesses operate with no formal governance structures in place. Working with my Members at the Alternative Board I have found a lack of formal governance can lead to struggles with succession, complacency within the business, family disputes and damage to growth.
Typically, when a family business is set up, the usual policies which non-family owned businesses put in place – such as terms for terminating contracts, shareholder agreements and how disagreements will be dealt with – are neglected. Family members trust each other and focus on growing the business instead of corporate structures. This is all well and good until a dispute arises, often several years down the line, at which point things can get extremely acrimonious. It’s far easier to iron out these issues and establish policies when everyone is in agreement.