End Conflict with a Family Business Constitution

Family Owned Business is a series of blog posts about the exciting, rewarding, often challenging, and always unique elements of family owned small businesses. No, we are not talking about the Mafia. Family members make great partners, right? Wrong! Read these posts before you risk everything. This post can help you end conflict by developing a family business constitution. You’ve worked hard, sacrificed tremendously, and now you are reaping the rewards after decades of sacrifice to build your dream. Your business is thriving. It is common for a business owner to now consider his legacy. How will you ensure that you keep your commitment to your employees and your customers into the next generation? Are you confident that your legacy will live on in a successful way? Creating a family business constitution is an excellent way to raise the chances of your small business succeeding into the next generation. Consider these benefits to such a document:
  • Preserve your original mission and vision.
  • Avoid family or business partner conflict.
  • Delegate authority to the most qualified.
You had a dream when you started your business. Against all odds, you turned that dream into reality. The worst thing imaginable would be to have that dream turn into something entirely different after you retire.
 You can create an original intent statement to include in your family business constitution that ensures your vision is kept alive. Family conflict is a primary factor in small business failure. This is especially true when the original or primary owner of the business is no longer in charge. There is often a void of leadership left behind. That void encourages well meaning but often unqualified mid level managers to become adversaries. The original business plan is often lost. Designating and delegating authority to your leadership team is the best way to avoid such conflict after you are gone. This is also an excellent gift to give your family in an effort to preserve the family unit. A family business constitutional document need not be a massive legal agreement. You can create such a document in less than two hours on a legal pad with a pen. It is best to create such an important document in the privacy of your home where you can get complete clarity. Include a trusted partner, like a spouse, to review the document. Consider these four elements to convey your vision for succession:
  1. Your mission and vision statement.
  2. Chain of command.
  3. Dispute resolution procedures.
  4. Charity wishes and guiding principles of your faith.
Poor planning leads the way for the destruction of your business and your family. Remember that creating the family business constitution is best left to a smart business strategist or the owner of the business. Consider including it as part of your business plan. Know that it is a working document and subject to change. Give your family the gift of stability and security. How have you planned to keep your vision alive after you are gone? Please share your thoughts.           
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