FAMILY BUSINESS MANAGEMENT

Course Code:ENT4315

Dr.S.SUNDARARAJAN
Chapter 5 - Family Business Plan – Strategies for improving capability of
family business, Rules to save family business, Essential content of family
Business plan, Creating a business plan.
family business planning
Family business planning must take into consideration the particular challenges of
familial cooperation, including estate planning and business strategy
development. However, oversight and cooperation can help alleviate some of
these potential tensions.
Business Strategy
• Family business planning may include developing strategies for business stability
and growth. Issues may include marketplace assessments, technology
adoptions, competition assessments, the development of financial goals, and
the fine-tuning of the company's mission and long-term goals for the family
business.
• Choose a business name.
• Appoint directors and officers.
• Appoint a registered agent.
• File the articles of incorporation.
• Draft corporate bylaws.
• Open a business bank account.
family business planning
How to Write a Family Business Succession Plan
• Choose the right business structure.
• Have a mission statement and a set of core values.
• Choose your successor.
• Talk to prospective successors.
• Talk to non-family employees.
• Making a plan is the first and most difficult step.
Starting a business can be an exciting but challenging experience. Going into
business with your family members or adding someone from your family to your
team after you expand can seem like a good idea on the surface since you may feel
like you can trust them more and be more comfortable around them.
Some of the world's largest family-run businesses areWalmart (United States),
Volkswagen Group (Germany), Samsung Group (Korea) and Tata Group (India).
Reliance groups of companies, Jio
Strategies for improving capability of family business

Family does play a central role in the formulation and implementation of

strategy. Strategy is shaped by creatively melding the demands and
opportunities of the business‘ market place with the goals and values of
those who own the business. Families who ignore this mixture foreclose
special competitive advantages.
Here are a five things I've learned from running a family operation:
• Identify strengths. Determine exactly what knowledge and skills each
person can contribute to the business, then accept those strengths for
what they are.
• Set clear expectations.
• Be flexible.
• Use every excuse to keep learning.
• Never take work home.
Strategies for improving capability of family business
1. Don’t hire relatives if they’re unqualified.
2. Avoid overpaying family members.
3. Keep good financial data.
4. Assign clear roles and responsibilities
5. Keep the lines of communication open

Strategies for improving the capability of a family business

6. Family firms must be able to Professionalize
7. The Demise of the joint family
8. Family first or business first
9. Good management
10. Ability to change
11. Have a strategic plan
Rules to save family business
Rule no.1 Don't put family members on the payroll if they're not
working in the company.
Rule No.2 Don't create two classes of employees—family vs. non-
family.
Rule no. 3 Be careful not to abuse family relationships
Rule no. 4 Communicate honestly and openly with employees
Rule no. 5 Don't confuse family decisions and business decisions.
Rule no. 6 Establish healthy boundaries between family and business.
Rule no. 7 Use family councils to address family matters. Some family
members will share the same values but not the same vision.
Rules to save family business
10 Golden Rules for Running a Successful Family Business
1. Choose the Right Business
2. Craft a Clear Cut Vision Statement
3. Work with a Common Goal
4. Enforce Discipline
5. Foist Team Spirit
6. Never Compromise Excellence
7. Insist on Accountability
8. Invest In Education and Training
9. Enforce Saving Culture
10. Adopt Effective Succession Plans
Essential content of family Business plan
Planning is more crucial to the family business than to other types of enterprise because
most families have a majority of their assets tied up in their business. Estate planning
becomes essential and is intertwined with succession planning, business planning, and
family planning.
• Set some boundaries.
• Establish clear and regular methods of communication.
• Divide roles and responsibilities.
• Treat it like a business.
• Recognize the advantages of family ownership.
• Treat family members fairly.
• Put business relationships in writing.
• Don’t provide “sympathy” jobs for family members.
• Draw clear management lines.
• Seek outside advice.
• Develop a succession plan.
• Require outside experience first.
Essential content of family Business plan
• Define roles: In the excitement of starting a family business, some
family members may have different ideas of how to run it.
• Compensation: Determine how compensation is awarded, whether
it’s a salary, hourly wage, percentage of profits, or something else.
• Ownership stakes: Define the ownership stakes before opening. Are
family employees working for a salary?
• Exit plan: What’s the exit plan for each family member? For those
starting out
• Create a succession plan: The business founders may want to retire or
pass along the business and start something else.
The executive summary the most important part of your business plan,
and perhaps the only one that will get read so make it perfect!
Essential content of family Business plan
Provide Financial Statements and Projections: Perhaps the most important
part of a business plan, especially for investors, partners and financial
institutions, is your financial projections. These show the viability of your
business in the years to come, according to Constant Contact.
• Executive summary
• Mission and vision statement
• Business description and unique value proposition
• Management team biographies
• Market analysis with competitor details and target market segmentation
• Marketing plan
• SWOT analysis (strengths, weaknesses, opportunities, threats)
Logistics and operations plan
• Financial statements and projections
 Creating a business plan
• A good business plan guides you through each stage of starting and managing your
business. You’ll use your business plan as a roadmap for how to structure, run, and
grow your new business. It’s a way to think through the key elements of your business.
• Business plans can help you get funding or bring on new business partners. Investors
want to feel confident they’ll see a return on their investment. Your business plan is
the tool you’ll use to convince people that working with you — or investing in your
company — is a smart choice.
• There’s no right or wrong way to write a business plan. What’s important is that your
plan meets your needs.
• Most business plans fall into one of two common categories: traditional or lean
startup.
• Traditional business plans are more common, use a standard structure, and encourage
you to go into detail in each section. They tend to require more work upfront and can
be dozens of pages long.
• Lean startup business plans are less common but still use a standard structure. They
focus on summarizing only the most important points of the key elements of your plan.
They can take as little as one hour to make and are typically only one page.
 Creating a business plan
Traditional business plan format
• You might prefer a traditional business plan format if you’re very detail-oriented, want
a comprehensive plan, or plan to request financing from traditional sources.
• When you write your business plan, you don’t have to stick to the exact business plan
outline. Instead, use the sections that make the most sense for your business and your
needs. Traditional business plans use some combination of these nine sections.
• Executive summary
• Company description
• Market analysis
• Organization and management
• Service or product line
• Marketing and sales
• Funding request
• Financial projections
• Appendix
Creating a business plan
Lean startup format
You might prefer a lean startup format if you want to explain or start your
business quickly, your business is relatively simple, or you plan to regularly
change and refine your business plan.
• Key partnerships
• Key activities
• Key resources
• Value proposition
• Customer relationships
• Customer segments
• Channels
• Cost structure
• Revenue streams
Creating a business plan
Main Components of a Business Plan
• Executive summary. This is your five-minute elevator pitch.
• Business description and structure. This is where you explain why
you're in business and what you're selling.
• Market research and strategies.
• Management and personnel.
• Financial documents.
The standard business plan consists of a single document divided into
several sections for distinct elements, such as a description of the
organization, market research, competitive analysis, sales strategies,
capital and labor requirements, and financial data.