Rules To Live By

Spell It Out

Not sure where to start when creating your family business policy? Here are the basic essentials included in most:

  • A mission statement
  • A policy on how important decisions are made
  • A method for handling disputes
  • A determination describing how and when children or other family members can enter the business
  • A method for family member performance evaluations
  • A mechanism and process for selecting a successor
  • A way of ensuring adequate communication among family members (even those not in the business)
  • A policy on compensation for family members working in the business
  • A shareholders' agreement
  • The role of nonfamily senior managers
  • The rights and responsibilities of shareholders, directors and family managers

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This article was originally published in the February 1999 print edition of Entrepreneur with the headline: Rules To Live By.

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