Key points in 30 seconds
- Separate three spheres: family, shareholders and management.
- Write down who decides what: a roles matrix prevents most conflicts.
- Open key roles to outside profiles, with real delegation.
- Prepare succession years in advance.
The three spheres
| Sphere | Questions | Where decided |
|---|---|---|
| Family | Values, employing relatives, rules between heirs | Family council |
| Shareholders | Dividends, investments, new partners | General meeting, board |
| Management | Strategy, organisation, hiring, operations | Executive committee |
Tension arises when a question from one sphere is settled in another, for example an operational decision made at a family dinner.
Clarify roles
Write a simple matrix: for each type of decision (budget, hiring, pricing, investment), who proposes, who decides, who is informed. Apply the same rules to family members and other employees: a defined role, objectives, pay aligned with the market.
Bring in outside skills
Growth often requires skills the family doesn't have: finance, sales, digital leadership. An outside executive will only stay with a clear scope and real autonomy. An independent board member also brings a neutral view.
Prepare succession
- Identify possible successors early, family or not.
- Gradually give them measurable responsibilities.
- Formalise a timeline and the rules for transferring ownership.
Signs it is time to structure
A family SME does not need formal structure as long as everyone talks every day and the founder sees every file. The need appears with size. The most common signs:
- The founder still approves quotes, purchases and hires, and has become the bottleneck.
- Two family members have overlapping responsibilities, and teams no longer know who to turn to.
- Capable employees leave because they see no career path.
- Investment decisions are postponed because shareholders cannot agree.
- The bank or a partner asks for more formal reporting than before.
Two of these signs are enough to start. Waiting for a crisis makes the conversations harder.
The family charter
A family charter is a written document, adopted by the family, that sets the rules between its members and towards the company. It does not always have legal force, but it prevents every situation from being renegotiated.
| Topic | Question to settle |
|---|---|
| Employing relatives | Under what conditions can a family member be hired (qualifications, outside experience, open position)? |
| Pay | How do you separate a salary for a job from a shareholder's dividends? |
| Governance | Who sits on the board, how are votes taken, is there room for an independent director? |
| Selling shares | What happens if an heir wants to sell their shares? |
| Disputes | Who arbitrates a disagreement, and through what procedure? |
The charter is best written in calm times, ideally with a neutral third party, and reviewed every three to five years.
Setting up an executive committee
An executive committee brings together the heads of the main functions, family members or not, every week or fortnight. It tracks indicators, sets priorities and prepares the decisions that go to the board. To make it work:
- An agenda sent in advance and minutes that record decisions, not debates.
- The same dashboard at every meeting: revenue, margin, cash, order book, hiring.
- One simple rule: operational matters are settled in committee, not at home.
To choose the right indicators, see our guide on managing by KPIs.
A 90-day plan to get started
Structuring a family business does not happen in one meeting. A first three-month cycle delivers visible results without rushing anyone:
- Month 1: one-to-one interviews with family members and key managers, then a map of current roles.
- Month 2: decision matrix, target organisation chart and first executive committee.
- Month 3: first rules of the family charter, hiring plan for key roles and a follow-up schedule.
An outside view often helps raise sensitive issues. At VSIA, this process starts with a free audit of your organisation.
Example: a second-generation distribution SME
Take a 60-employee distribution company founded by a father and partly taken over by his two children. The son runs sales, the daughter runs purchasing, and the founder still signs off on every expense. Salespeople report sometimes to the son, sometimes to the father; suppliers receive conflicting instructions.
The restructuring followed three steps. First, a decision matrix set out who approves what: the founder keeps investments above a threshold, and each child decides alone within their scope. Next, a weekly executive committee was created with the finance manager, hired from outside. Finally, the family adopted a charter providing for an independent director and a five-year timetable for transferring the capital.
Six months later, order approval times had been halved, and the founder spends his time on relationships with major suppliers. The example shows that structuring does not take power away from the family: it makes clear who decides, which speeds the company up.
The same logic applies at any size: write the rules before a disagreement makes them necessary.
Frequently asked questions
How do you structure a family business?
By separating the family, shareholder and management spheres, defining who decides what, applying the same rules to all employees and opening key roles to outside skills.
What is a family council?
A body where the family deals with matters that concern it (values, employing relatives, rules between heirs), separate from the company's governing bodies.
When should succession of a family SME be prepared?
Several years in advance, to train successors, organise the transfer of ownership and reassure customers, banks and teams.
Do you need a consultant to structure a family SME?
It is not mandatory, but a neutral third party makes it easier to discuss roles, pay and succession, which are hard conversations between relatives.
What is a family charter?
A document adopted by the family that sets rules on employing relatives, pay, governance, selling shares and resolving disputes.