Great to see a piece in The Irish Times focusing on the family business and the importance of family firms to the Irish economy.
Succession is again flagged as a challenge and the need to address the matter as early as possible which is important to enable sensible discussions and decisions to be made, for the good of the family and the business.
However, it goes on to suggest a key step is the formation of a family council and that this should lead to a family charter, but we would advocate a much less prescriptive approach, one that focuses on the needs of each family, takes into account their circumstances, and the way that both the family and the business are currently governed.
Pulling together a governance framework that is right for the family firm may include a charter and event a family council, but the key thing that needs to be addressed is honest and open dialogue, finding out what each and every stakeholder wants and forming a way forward.
Families in business need to talk, be honest and open and if that means creating documents in order to do so, that is great, but the document itself does not solve the challenges in family firms until consensus is reached.
Family businesses have been described as the backbone of the local economy. Less focused than typical PLCs on short term results, they are better able to take the long view on investment and profit taking. That in theory makes them more resilient when the inevitable recession bites But they often suffer from a similar weakness: lack of a clear strategy for handing over control from one generation to the next. And that vulnerability matters because of their scale. Michael McQuillan, Director of Ulster University's Business Institute says family businesses make up most of our largest locally owned firms.