Good governance is critical for every business however not every governance solution will work for every business. Family businesses, in particular, can be stretched. Everyone is so busy just working in the business it can be easy to lose sight of the big picture. And what about when it’s time to think about handing over the business to the next generation? A family advisory board can really help to put a structure around planning for the future and give everyone a voice.
The board is a body of ‘elected’ or selected members who oversee the activities of a business. The focus of the board should be to add value to your business and improve processes. The board’s role is to determine business goals and objectives based on the owner’s succession plan or goals and wishes and to develop and nurture business relationships with suppliers and customers.
When it comes to deciding on board members, you need to opt for trustworthy members with focus and relevant experience and expertise. It goes without saying that a board member should always have integrity and act ethically. You will also need an experienced leader or two on the board. It is a good idea when appointing board members to look for trusted people who can provide skills and insights other members may not possess, e.g. accountant, lawyer, or banker. When it comes time to pass on your business or just your financial advice to the next generation, think about the trusted advisors you have used and how they can assist with your family members (for example - your accountant)
As a board member, your role would include establishing objectives, making sure adequate resources are available (including finances) and approving budgets.
It is also a good idea, in a family business, to have a few independent board members. They can bring in specific business expertise and also help to defuse potentially emotionally charged issues where they arise.
Talk to us if you think this model might offer your business a foundation for planning where the business is heading. And if you are getting to the point of handing a business over to your children or just being in a position of offering them business advice feel free to include the team at ilumin in these conversations, we’re here to help.