Family businesses need to create a family charter in order to guide them through various opportunities and challenges, including evolution and succession, BNF Bank Team Head of Corporate Banking Stephanie Attard stressed on Thursday.
A family charter is a document that is used in order to record agreements made between family members, particularly in terms of how a family business should be run.
While these documents are not legally binding, they can be useful in clarifying a number of key and potentially sensitive issues that such businesses must deal with.
A family charter should include the vision, mission, culture, and ethics of the family business, together with the manner in which decisions are taken. This is done to ensure that the business continues to be true to the values and objectives it was founded with.
Ms Attard remarked that a family charter outlines a number of “essential aspects” of a family business, including “ownership transfer, leadership roles, remuneration packages, and conflict resolution mechanisms”.
Therefore, it can serve as a “compass to guide a family business through the complexities of evolution and succession”, she added.
In Malta, family businesses account for more than 70 per cent of SMEs, and hence serve as a crucial part of the local economy. These businesses serve as the lifeblood of Malta’s business community, embodying a rich tradition of entrepreneurship and values that span generations.
Turning to her experience dealing with family businesses, particularly when discussing the construction of a succession plan, Ms Attard said that presently, many businesses are navigating changing family dynamics, passing the torch to the next generation. It is at this “pivotal moment” that she and the rest of the Corporate Banking Unit team at the bank step in to “protect and evolve the management of businesses, ready to build enduring relationships with retiring leaders and support the emerging generation in their journey of growth and leadership”.
A family charter was a topic that was widely discussed during the Family Business Forum, an event held earlier this year by Ganado Advocates and Zampa Debattista. During the conference, it was pointed out that a number of family businesses tend to put succession planning “on a backburner”, choosing against having it written down.
“A succession plan isn’t something which is abstract. It needs to be put down on paper and shared with the relevant people of the organisation and revised on an annual basis. A succession plan is about business continuity,” Zampa Debattista Co-Founding Partner Matthew Zampa stated.
During the same event, Marthese Portelli, CEO of the Malta Chamber of Commerce, Enterprise and Industry, remarked that only half of family businesses who have a written strategic plan, also have a written succession plan, a statistic that is “very worrying” for the local business landscape.
Despite the fact that many family businesses are “lagging behind” in this regard, she explained that there is a “willingness to improve”, with more businesses looking into putting pen to paper on their long-term future.
BNF Bank Team Head of Corporate Banking Stephanie Attard / BNF Bank
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