HOW TO ESTABLISH A FAMILY BUSINESS

Lawrence K. Ayodele 

Family business is an income generating venture established jointly by the husband and wife to provide strong financial base for the family.   

Prerequisites for Family Business

 Husband and wife aspiring to have a family business must satisfy the following conditions.

·        Both of them must operate a joint account in their family.

·        They must see themselves as partners with equal right in the business.

·        They must both regard their marriage as a life relationship.

·        There must be mutual trust between them.

·        They must agree to register the company with their names. In an ideal situation the husband should be the Chairman/Chief Executive Officer of the company, the wife should be the Managing       Director and each of their children should be directors. This will ensure continuity of the business.

·        They must have a settled and peaceful home.

·        Both of them must have the fear of God and demonstrate it in their interaction. 

Determining the Type of Family Business 

Husband and wife cannot wake up one day and start a family business. They must have vision for the business. The vision usually starts with one person. The party that receives the vision will sell it out to the other party. Until the other party receives the vision and is convinced to go along with the party that received the vision, they should not start.

What to consider in deciding a venture that a family can undertake as a family business are as follows:

·        Is it approved by God?

·        Does it contribute positively to the life of other people?

·        Does it conform to legal code of the nation in which it is to be established?

·        Who will be in charge of the day to day running of the affairs of the business.

·        If it involves technical input that the husband and wife cannot provide, how will the family recruit the technical expert that will handle the technical aspect.

·        Feasibility and viability report of the business should be prepared by an experienced financial consultant. This will reveal the cost / benefit analysis of the venture.

·        Sources of capital to finance the company must be considered. The family may use the family saving, contributions by group of people or bank loan.

·        The location of the business. This is very important because it determines the growth of the business.

·        It must be incorporated in the Corporate Affairs Commission. 

How to Operate Family Business 

If the family business is to grow and continue from generation to generation, it must be operated very well.

·        Both husband and wife must commit themselves to the success of the business.

·        They must set aside certain time daily to discuss the progress of the work.

·        The employee working in the venture must be well managed and monitored for effective operation of the business.

·        The profit of the business must be ploughed back into the expansion of the business. For this reason either the husband or wife must be in a paid employment at the beginning of the family business. The salary of the working party should be used to run the affairs of the family at the gestation period of the business.

·        As much as possible, the extended family should be kept away from the affairs of the business.

·        One of the children of the family must be brought into the management of the business at the appropriate time. This will ensure the continuity of the business.

·        A current account should be opened in the name of the business in a commercial bank. This may help the family when seeking for bank loan for the expansion of the business.

·        The family should think of business diversification. This will create strong financial base for the family.

·        The family must seek the services of a financial consultant that will offer financial advice from time to time.

For workable plans and coaching on how to establish and run a family business successfully, kindly contact thecounsellor@marriagediscovery.org.