Research tells us there are three key factors for the perpetuation of a family-owned business: having a strategic plan for the business, using a board that includes outside directors, and holding family meetings.

A good strategic plan helps grow and sustain any business, so that one comes as no surprise. And many family-owned businesses have seen the light and are realizing the advantages of a real board of directors that includes qualified persons who are not family members or employees of the business. But family meetings — do we have to?

Many family business owners have seen the three overlapping circles reflecting Family, Ownership and Management that aid in the understanding of the dynamics in a family-owned business. This article focuses on the Family circle, including portions that overlap with Ownership and Management.

Seems easy enough, but it is not as simple as you might think. Despite the advantages of family meetings, a recent survey of family-owned businesses indicated only about half hold family meetings. Go to gvsu.edu/fobi to read the complete survey.

Below are a few tips for getting started with family meetings or improving your existing practices.

Who should be invited? Generally the more inclusive, the better. Thus, you would include all family, whether or not they are active in the business or own shares. I encourage the inclusion of spouses, even if they don’t own shares, since they are impacted by the family business and are frequently a parent of a present or future shareholder. I also encourage participation by children, typically subject to being over a certain age.

Where should the meeting be held? Starting out, I would avoid holding the meeting at the company offices. Instead, I would suggest a venue that is more neutral between employees and non-employees. The home of the senior family member works great, or perhaps a venue that can also provide recreational or other activities the family might participate in as a group. Once you have a couple of meetings under your belt, holding the meeting at the company’s offices makes more sense and can also help family members who are not active in the business to better understand the company’s assets and operations.

Why would we do this? Family meetings clearly help a family business survive longer. They foster good communication and can be a vehicle for building better relationships between family members. These alone cannot assure the survival of a family business, but they can be a huge help in addressing and resolving conflicts that may come along. Family meetings are also a great vehicle for preserving and passing along the values and traditions of the family and the business to the broader family.

Should we have an agenda? Absolutely. A written agenda, distributed in advance, helps assure any meeting will accomplish its intended goals. It also helps participants come prepared to address the issues or topics at hand. In the context of a family-owned business, which can involve interesting family dynamics, the agenda can help avoid surprises and hidden motivations. It is still good to leave room and opportunity for other topics to be raised and even better to solicit input for agenda items ahead of time.

Who leads the meeting? The CEO often leads the meeting but it is helpful if a different, senior family member can take the leadership role. Also consider co-leaders, such as one who is active in the business and one who is not. An outside facilitator can be very helpful in this role, but this must be balanced against considerations of cost and the possible chilling effect on shy family members who might be leery of having an outsider present. If there are contentious issues or a level of discord anticipated, an outside facilitator should be strongly considered. Also consider rotating the leadership among family members. Presentations can and should come from a variety of family members, and this can be a great development opportunity for younger family members.

Is this a shareholder meeting? No, but it can be. Since you will likely have all of the shareholders in attendance, it is a convenient time to address matters requiring attention from the shareholders. Generally, the key action item for the shareholders is the election of directors. Less common items requiring shareholder action would be approval of a major transaction or amendment of governance documents. Those matters can be handled separately from the family meeting and can also be handled by written consents signed by shareholders.

What issues should be addressed? If family meetings have not been a practice in your family, it may be best to start out with meetings that focus more on sharing information, such as describing the operations or history of the business, as well as the family’s history. But the goal needs to be engaging the family, fostering a sense of relationship, and then building on the common ground that unites the family.

Possible topics for a family meeting include:

• Review of business and family assets

• Review or explanation of any estate planning that is in place, either generally or with specifics

• Succession planning for ownership and leadership

• Family philosophy for balancing between distributions or reinvestment in the business

• Are we a business first family or a family first business?

• Creating team building, fun, bonding activities

• Family employment policy

• Family compensation and benefits

• Pre-nuptial agreements

• Buy and sell or shareholder agreements

• Family philanthropy

• Development of family creed, mission statement, or constitution.

Family meetings can be a little awkward or even tense. But they are well worth the effort and are a proven factor in helping a family business to succeed to future generations.

Bruce Young is a third-generation shareholder, director and secretary of the Behler-Young Co. He also serves on the board of the Family Business Alliance. His day job is as a partner with Warner Norcross & Judd, where he has served as a trusted advisor to family-owned businesses for more than 30 years.