Family Business Strategy
The success of a family business depends on the effective choice of family business strategies. Normally, properly defined frameworks can help solve the challenges arising in the course of managing the business. The identification of the type of legal entity helps stipulate the business relationships and the aspects to be considered during business expansion (Ward, 2016). The conflict resolution modalities, succession planning, and effective investment policies are sufficient to guarantee the longevity of the business. Therefore, outlining a family business strategy is critical to achieving success.
The most appropriate type of legal entity for the chosen family business strategy is a limited liability company. What makes this option most viable is the ease of management and operation of the form of business. This type of entity imposes limitation on the extent of liability that members affiliated with the business have in case of unplanned occurrences. The taxation policies also imply partnership to curtail the potential losses of every co-owner. The relationship in the business should always be based on a family ownership scheme with the defined unity and clearly communicated vision that highlights the future operations (Wessing, 2014). Such an approach mitigates possible adversities that would undermine the scope of business performance.
The expansion and growth of the business would also presuppose restrictions of the interest withdrawal by the family members. The potential success of the business and its development depend on the rate of the return from the venture. In this regard, the sustainable growth would be possible in case of successful reinvestment activities planned for the entity (Wessing, 2014). There is also value in the growth potential of the organization and it depends on the degree to which the next generation in the organization engages in the mainframe business processes. Consequently, there is a need of trusted advisors involved in the business to enable information sharing, which would help create some viable investment plans aimed at expanding the business. The parties would also liaise with the board in the matters of conflict resolution so that all the established business processes meet the pre-outlined objectives (Ward, 2016). In addition, all family members should be acquainted with the trusted advisors to avoid misadvise and situations when some family members pursue individual interests.
The succession planning in the organization would include mentorship of the younger family members to acquaint them with all the business processes. The extent of engagement of the next generation in the family business should include the standard operation modules in preparation for succession. Thus, in case of a sudden incapacitation of a key family member, the younger ones would have enough competence to substitute him/her.
The governance system of the business assumes independence of the board of directors from the family leadership. This option would be helpful in streamlining the decisions and modus operandi to ensure the achievement of business objectives (Wessing, 2014). A chairman of the board of directors would be the leader to oversee the business protection policies.
The investment philosophy would be guided by the mentors who identify the most viable strategies for consideration. In the business layout, the business should be the priority to guarantee the sustainability and longevity of the operations. Therefore, all the decisions the family members take must ensure the success of the family business.
In conclusion, the success of the family business layout depends on the type of legal entity created. The expansion and growth considerations should guarantee acceptable return. Succession planning would ensure the adequate preparation of the junior family members. Determining the business the priority over personal desires of the family members is crucial to the business success.
Ward, J. L. (2016). Keeping the family business healthy: How to plan for continuing growth, profitability, and family leadership. New York, NY: Springer.
Wessing, T. (2014). The family constitution guide: An introductory guide to family constitutions, their scope, impact, and uses. Family Constitutional Legal Guide, 4(1), 1-42.