What begins as a small family business needs to adapt to changing needs and be scalable for growth. Businesses without sound organizational structure are not set up for sustainable growth and easily stumble over future roadblocks. Better family management practices can build a stronger foundation within a business that can weather and adapt to whatever the future brings. Some tips and strategies can help family businesses succeed throughout generations.
Determine Your Decision-Makers
It is necessary for any organization to have a clear structure. All leadership roles should be clearly designed and designated to parties that have aptitude and some level of objectivity. Leaders need to be able to see past the family squabble and look for the resolution that benefits the interest of the entire family as it applies to a successful business. What often comes to a head in a family business are family loyalties versus successful business management. Decisions are made to appease and end up undercutting the success of a company.
An organization can:
- Select the best candidates for leadership roles. Mentor these individuals and grow them into their roles in order to ensure that they are the right fit for the position and that performance meets your standards. Eventual succession plans might incorporate one or more of these individuals but a strong top-tier management system must be established nonetheless.
- Each leadership role should have specific areas to manage and individuals that report directly to them. They can lead family council(s) and help establish an objective way to resolve family and business issues and look for areas of improvement. Strong management practices allow for delegation of tasks and trusting key family members to resolve family squabbles in the best interests of the business.
- Create objective processes and policies that key individuals agree to and that are established to benefit the entire family. It can be impossible to get the entire family to agree on an item. If this is the case, the most level-headed and objective individuals should come to a consensus.
Start Early on a Plan for Succession
When considering a time to hand over control of the family business, begin planning early. As an owner with key leadership roles filled within your organization, see the skills that individuals bring to managing their area and the soft skills of sensitive but authoritative communication necessary when handling the emotions of family members. Business comes first but there are ways not to steamroll over the egos of individuals. Create ways to show those interested leaders how to communicate, expand their responsibilities, see how they meet performance objectives and observe how they handle challenge. Decide when to start the transition and begin to slowly hand over the reins of responsibility.
Consider Bringing Outsiders In
It may be necessary to bring non-family into the family business. Some situations are:
- If the squabbling is impacting on sound decision making, it can work best to bring an authoritative voice in with the expertise and experience to make decisions that might hurt feelings but lead to better financial outcomes.
- When a candidate to groom for succession does not exist within the family business at the current time, a trusted outsider can help to maintain the integrity and processes of a company as well as look for opportunities to develop the business.
- When an objective and dispassionate eye is needed to develop processes and structure based on what will make the business more effective and flexible and not feel obligated to hold unto the way things are due to family pressures.
There are only so many issues that an owner can handle. Avoid getting bogged down in family drama and use your energy to work on developing the business. A non-family member in a position of authority can handle the day-to-day operations and allow an owner to create more efficient practices and determine future strategy.
Invest in building a strong family management system to address issues within the organization and resolve family conflict. A solid framework of what to do when issues arise help to provide a consistent conflict resolution system. Groom leaders to invest into the success of the business. Solid practices make for sustainable future growth and a healthy business model.