Rules To Live By

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

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