Ms. Pendergast said there can come a point in time for a family business where decisions have to be made affecting more than just the single head of the family business. Making the right choices that satisfy the family's interests can be a daunting task for one individual, especially where there are siblings, children and a spouse who have a vested interest in making sure that the right decision is made, she noted.

At that juncture, Ms. Pendergast said it is time for the family to consider the issue of governance and possibly bring in some outside advisors to help with the decision-making.

The governance issue usually crops up during times when dramatic changes are taking place in the business, said Ms. Pendergast.

Usually, Ms. Pendergast advised, these times are times of transition in ownership from one generation to the next, or the business has hit some sort of entrepreneurial wall where the principal owners feel they need help with their direction, or simply things have come to a point where the owners feel there is a need for outside help.

At this point, it is time for the head of the business to move away from being the single decision-maker and create a system that involves family members who have an interest in the company and some of the decision-making in the company's future.

"You can choose to do nothing, but you need some way to make decisions, and a lot of times, especially when there are fewer people involved in making decisions, they put off [forming a system of governance] when they should act," Ms. Pendergast observed.

The first action any owner should take is to call a family meeting specifically to discuss business issues. Waiting until there are holidays or special occasions can just sidetrack those discussions. Also, the talks should leave out personal issues not related to the business, she said.

"Call the family meeting," she said, noting that this should be a regular affair, not something done when there is a crisis. "It could be formal or informal, but it needs to happen."

Sometimes, no matter how good the intentions of the meeting, there are no easy ways of resolving issues or coming to a consensus. At this point she advised that the family should consider creating a board of governance. Its responsibility would be to review business issues and, depending on its responsibilities, order or advise on what needs to be done.

A board of directors would, as in the public business world, order changes, while a board of advisors would advise on issues. In either case, she recommended that such a board should consist of at least two outsiders who are not related to the family either through friendship or business. They should also be people all the family feels they can trust.

In choosing the prospective board members, she recommended they meet with all the family members individually to get an agreement on comfort. But, she admitted, there may be people within the family who are simply not ready for such a move.

"If they do not want to hear what others want to say, then you are not going to have an effective board," she noted. "The family has to get to the point where they say, ?There are people out there who have ideas that we could use.'"

For the younger generation, the decision must be made by the older family members when to bring them in for an education about the business, how finances work, and how it is to be run in the future. This is something that should be done to commit them to the business and to keep them involved in its future.

"A crisis is not the time to get this done," said Ms. Pendergast. "It should be done when you have the luxury to think ahead about the business, looking five years off into the future."

The AAMGA is based in King of Prussia Pa.