Managing a Family Business

Family businesses are exceptionally common in the Middle East, particularly in the Gulf states. Many of these businesses are over one or two generations in age and have mushroomed into giant conglomerates with impressive portfolios, from distributorship rights for foreign companies to construction and manufacturing arms. Some are regionally-known brands. All this does not mean, however, that these businesses are always well run. Certainly, such enterprises need to periodically evaluate and monitor a number of aspects of their businesses. Some of these include:

(1) Corporate Governance Structure. Talking about corporate governance and papering documents can be a bit of a taboo in such family enterprises, but it is absolutely essential. Questions to ask:
– What is the decision-making protocol? Is it formalized?
– Are the corporate books in order?
– Who has power of the purse?

(2) Intellectual Property (IP) portfolio. What kind of rights does the business have over its own marks, copyrights, and patents? What kind of rights does it have over the IP that has been licensed to it by other companies?

(3) Succession Planning. What if a key person leaves the enterprises.

Again, running a family business is no easy feat. Companies need to be exceptionally concerned about management. It goes without saying that poor management can affect the bottom line tremendously, and make the enterprise even more difficult to handle.

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