Why bother with a Family Charter?
We spend a lot of time talking to family-owned businesses about the importance of developing a Family Charter together.
“Why?” you ask. Or, “What’s a Family Charter?” you might be wondering. Put simply, a Family Charter is a written agreement between family members.
It covers business-related issues such as ownership, voting/control and employment. It can also be called a family mission statement or a family constitution (they’re all the same thing).
A Family Charter is an important document to have in place from a legal perspective. This applies whether you intend to keep or sell the family business.
One thing a Family Charter does is dictate how money is to be divided between family members. It puts transparent ground rules and agreements in place to do this fairly.
The process of developing a Family Charter is a cooperative one. It requires the family to devise and agree upon on a unifying set of rules and expectations for the business.
We’ve witnessed many families developing Family Charters and it’s an incredible journey for them to take.
Very few families (tight-knit or not) actually sit down and talk about what they want for themselves and for the business.
Developing a Family Charter can draw out discussions about future goals, roles and what is and isn’t important to each individual family member.
It’s a rich experience that really brings the family together.
Although it sounds it, a completed Family Charter is not that complex or difficult to achieve. Its real value is in the conversations that lead the family to come to their decisions.
What’s written is the outcome of much thinking, debate and at times arguing over what is really important.
The best way to develop a Family Charter is to get all the right people in the room, allow frank conversations to happen, address the sticky issues and ensure everyone is heard.
At Family Business Central we have a ‘go slowly’ approach to ensure that family members have plenty of time to think about the concepts and implications.
The process of developing a Family Charter needs to be transparent and when done well provides a set of guidelines for the family and for future generations.
A Family Charter has the power to reduce conflict and strengthen relationships—what family doesn’t want that?
Whatever you do, we advise against taking the easy road and ‘cutting and pasting’ someone else’s document. It just doesn’t work – you need to do your own.
If your family can accomplish a Family Charter on its own, we have a cost-effective step-by-step process that gives you all the questions to ask and the issues to address.
Some families need a facilitator, or at least feel that it will be easier and smoother with a facilitator, and we can also help you with this.
If in doubt, we’re here to help you work out the best way forward for your family.
To chat with a Family Business Adviser call Philip Pryor on 027 411 8820 or Bob Selden on 027 565 1110.