Family businesses usually start out as simple organizations. But as they develop and grow they face greater complexities and challenges, often leading to tensions among the owning family over how they run the firm together. A common solution is a constitution outlining the values, principles and procedures that the family agrees to follow.
They are important as they help in managing expectations, avoiding misunderstandings, specifying roles and responsibilities, fostering greater harmony, and ultimately making better decisions. If done well and followed, they offer a strong foundation for a sustainable future.