Succession planning – defining roles in a family-owned business
In any business roles can blur, making it easy to lose sight of how many hats you wear every day. It’s especially true of family businesses. When you need to put together long-term plans, clarifying key business roles can help articulate your goals.
Whether you’re running a small family business or one employing dozens of people, defining roles and governance is vital for any SME. The basic roles are those of ownership, governance, management, and operations.
Setting out a clear structure can bring long-term benefits and prepare your business for growth.
Ownership:
Aside from literally owning the business, these are the people responsible for setting out an effective governance structure and protecting the company’s future. Owners need to have a succession plan and ensure that a transition happens as smoothly as possible.
Governance:
Refers to the people in charge of a business’s long-term strategic planning and objectives. While the owner has the final say on where a business is heading, having a structured governance process ensures the owner’s wishes are being met.
Management:
Runs your business day-to-day, working towards quarterly, monthly, or annual goals. They focus on bills, cash flow, and play an integral role in hiring and training. Management doesn’t have to be part of the family — some business owners choose to have non-family members in charge, or choose an outsider to train younger family members into future management roles.
Operational:
Refers to the non-financial side of the company. It’s where the work gets done, for example, the people out labouring on the farm, or meeting clients every day. Many family businesses view experience at this level as essential before moving up to a management role. Clearly defining these levels can help business owners manage career progression.
Setting out job roles and a clear structure ensures everyone knows what they are doing and what’s expected of them. It can be hugely beneficial in planning a staged succession to the business addressing key concerns and values.
Contact us if you’d like to discuss further.