Debra Chantry-Taylor is a business owner and part of a family with multiple marriages and children. While she can usually be found teaching business owners about the highly effective Entrepreneurial Operating System, she also knows a great deal about running a family business.
Debra shared an exclusive presentation with Business Blueprint members about managing this type of venture.
According to Debra, “A family business is usually a highly trusted business and is highly regarded for its contribution to the community. However, it’s also normal to experience a mix of emotions and challenges when you’re part of this type of organisation.
Family businesses have unique issues such as nepotism, inappropriate role assignments and family dynamics influencing business operations.
Take a look at some tips to maintain harmony amongst family business operators while also ensuring a positive growth trajectory.
The Three-Circle Model of family business
One effective tool for managing these businesses is the Three-Circle Model, developed by Harvard University. This model highlights three separate but overlapping circles: the Family, the Ownership and the Business.
- Family Circle: This includes family members who would gather for holidays and special occasions. They may or may not work in the business.
- Ownership Circle: This group may not include all family members. Sometimes there are also owners who aren’t part of the family.
- Business Circle: This circle focuses on the operational aspects of the business and includes non-family employees as well as family member employees.
To manage these circles effectively, it’s crucial to set boundaries and ensure clear communication. Each circle has its leader and specific priorities, rules of engagement and meeting structures. By keeping these circles distinct, family businesses can avoid confusion and keep things fair.
“Clarity in roles and boundaries is key. Be clear about where you add the most value and ensure everyone in the family business knows their role. With the right structure and communication, a family business can be a fulfilling and successful venture.” – Debra Chantry-Taylor
Setting boundaries and roles
Clear boundaries and role definitions are essential in family businesses. To share an example, in one family business, the father was struggling to let go of control. By defining his role as a visionary and delegating day-to-day operations to his sons, the business ran more smoothly, and the father could take much-needed breaks.
Decision-making in a family business
According to Debra, “Before you make decisions in the business, take a step back and figure out who will make the decisions.”
This includes deciding who will be involved in figuring out:
- How much each family member earns
- The ownership each family member has in the business
- Which family members can be hired
- If a family member should be let go
- If family members can supervise other family members
Other decisions that need to be made include:
- What gets discussed at home and around different family members
- Gifts and bonuses that family members receive
- How much leave family members can take
Engaging the next generation
Encouraging the next generation to join the family business can start early. From my perspective, I think it’s a great idea to allow younger family members to work in the business, but also ensure they gain experience elsewhere.
This helps younger family members to develop necessary skills and choose to return willingly, rather than feeling obligated.
Remember, being a family business owner doesn’t necessarily mean your offspring have to work in the business; they can also be excellent business owners managing their own assets.”
