It is no secret
that each generation of a family owned business faces unique challenges. It is
also no secret that the majority of businesses are family owned businesses.
Yet, for many, the term family business can conjure up stereotypes of family
squabbles, mom and pop shops, nepotism, and lack of sophistication. While there
are businesses that fit some (or all) of those stereotypes, it is our
experience that these stereotypes are not an accurate description of many
family owned businesses. Indeed,
we continue to see many family businesses that are thriving, growing, and using
their family ownership as a long term competitive advantage.
Keeping the
family in the family business is not easy and does not happen by chance. It
requires hard work, commitment, and accountability. In our work, we have
noticed several themes that are common in successful family businesses. What
are some of those themes that help family businesses sustain themselves for the
long haul?
1)
Retention of both family and non-family
talent. Retention is
nurtured through a level of trust, commitment to the vision, and strong job
knowledge. When a crisis occurs, regardless of prior squabbles, the team pulls
together.
2)
Wise financial management with patient
capital. The family maintains a long-term time
horizon utilizing patient capital and minimized debt. This is accomplished with
a judicious approach to capital expenditures. Maintaining the concept of
frugality allows the family, the business, and the ownership to be ready for
the next opportunity and to weather the next downturn.
3)
Openness and transparency.
The family has a willingness to discuss sensitive issues with
transparency and openness. Family members are willing to serve the family and
business by frequently placing the needs of the family system, the business
system, and the ownership system before their own personal desires.
4)
Effective structures.
There is commitment to systems, processes, and practices that provide
the right structure for their family and business. There is a commitment to
educate all family members and shareholders so there are minimal
misunderstandings and minimal misaligned expectations.
5)
Intentional development.
Families in business that are committed to the long haul, consistently
and intentionally set aside time to discuss and revisit the first four themes
so they can keep up with changes in the family, the business, and the
ownership. To implement these themes and subsequently revisit the themes with
an unbiased eye, families in it for the long haul utilize unbiased, third party
resources.
Well-run family businesses, in it for the long haul, stay focused
on the things that will help them navigate the ever-changing challenges that
they face.
For more information contact SKM Associates Family Business Consultants