70% of family businesses do not survive the generational transition. The main cause is not lack of money or market — it is the absence of clear rules among family partners.
The family protocol: what it is and why it matters
The family protocol is a document that governs the relationship between the company and its family members. It establishes who can work in the business, under what conditions, how dividends are distributed, how key decisions are made, and what happens when a partner wants to exit or passes away.
It does not have automatic legal force, but when well-drafted and complemented with the correct corporate bylaws, it becomes the best protection against internal conflicts.
The most critical internal controls
Beyond the protocol, every family business needs to implement:
- Separation of duties: whoever approves an expense cannot be the one who executes it
- Joint signatures: for payments above a defined threshold, authorization from two partners is required
- Monthly financial statements: audited or reviewed by an independent external accountant
- Board of directors or management committee: even if informal, important decisions must be recorded in minutes
Succession: the most critical moment
The succession plan must be defined while the founder is active and fully capable — not when they can no longer make decisions. The minimum elements of a succession plan are: identification of one or more successors, a gradual function transfer program, a business valuation mechanism, and an exit framework for partners who will not continue.