By Russ Haworth, Founder, Family Business Partnership
This post is part of a series in which Russ Haworth and the team at Family Business Partnership highlight the themes they see most often when working with family businesses. Not unusual or complicated ones, just the common, everyday challenges that arise as families change and grow. The aim is simple: to help families recognise what they are experiencing, feel less alone in it, and understand that there are practical ways through.
This topic: Professionalisation (or our preferred term: Formalisation)
Professionalisation. It is a word that tends to land awkwardly in family businesses.
For a founder who has built something real over decades, hearing that the business now needs to become “more professional” can feel like a criticism dressed up as advice. As if everything that came before was not quite good enough.
That is why we prefer a different word: formalisation. Creating the right level of structure, clarity and communication for the stage the business and the family are entering.
A subtle shift in language, but it changes the conversation entirely.
Why the Need Arises
Most family businesses start on instinct. Decisions are made quickly by founders who know the business inside out. Formal structures feel unnecessary when the people involved share a deep mutual understanding.
But businesses grow. Families grow too. And the informal ways of working that once felt natural can start to create friction instead of flow. That is not failure. It is evolution.
Succession is one of the most common moments when this need surfaces. When leadership shifts from one generation to the next, what worked informally between two people rarely scales to a broader group with different roles, different relationships to the business, and different ideas about how to lead it.
This is the point at which we often say: clarity before change. Before you restructure or plan for succession, you need to understand where you actually are. What is working, what is creating tension, and what the family wants for itself and the business going forward.
A Story We Recognise Often
We have worked with a number of families at exactly this crossroads. One situation comes up again and again: a business shaped entirely around its founders. Built together, run together, decisions made without needing to write much down. The understanding between them was so established that formal process would have felt like an intrusion.
Then came succession. The next generation was ready and committed, but there were more of them, and they came to the business from different angles. They were not a single voice in the way the founders had been, and they could not be.
The founders’ way of working was not wrong. It had served the business well. But it could not simply be handed down.
For many families, that realisation brings anxiety. A fear that formalisation means losing something: the warmth, the speed, the trust that has always underpinned how things get done.
What we find, almost without exception, is the opposite. When families get clear before they change, the structure they arrive at belongs to them. Not a framework borrowed from a textbook, but a set of agreements about how they want to work together. Done well, it strengthens what was already there.
What Governance Actually Means
Governance is a word that can feel overbearing before you have even started. In a family business context, it is much simpler than it sounds.
It is about who makes decisions, what those decisions involve, and where they get made.
Getting clearer on those questions reduces the ambiguity that so often sits at the root of family conflict: Who has authority here? Were we all supposed to be consulted? The right level of structure depends entirely on the family. Too little and things get stuck. Too much and the structure becomes a burden.
But structure is only part of it. A family charter that sits in a drawer changes nothing. A board meeting where nobody speaks honestly is not governance, it is theatre.
Ultimately, mindset and behaviour matter more than structure. Succession carries real emotional weight: questions about control, fairness, letting go. Those do not get resolved by drafting a document. They get resolved through honest conversation, supported by the right conditions.
It Is Not About Becoming a Different Business
The strongest family businesses we work with are not the ones that became more like other companies. They are the ones that found clearer ways of working together that suited them, and held on to the values that made them successful in the first place.
Formalisation, done well, does not dilute what makes a family business special. It protects it.
Clarity Before Change
If your family business is approaching succession, or already in transition and finding it harder than expected, the most useful first step is rarely a governance review or a strategic plan.
It is getting clear. Clear about where alignment is strong, where there are gaps, and what the family actually needs before anything changes.
Our Family Business Assessment is a good place to start. Twenty-one questions that surface the areas most likely to influence alignment and long-term flourishing, followed by a clear, honest report of where things stand.
To hear more on formalisation, including the concerns families most commonly raise and how to work through them, listen to our podcast episode on professionalising the family business.
Russ Haworth is the Founder of Family Business Partnership. He works with family businesses across the UK and internationally, supporting families to navigate the challenges of being in business together.
