I compare family businesses to professional sports teams often. I believe business is a competitive sport and there are many parallels we can learn between professional sports and professional business.
Sports has shown us many great dynasties over the years with teams that have had decade-long success. Rarely does that success become repeatable over several decades.
Successful family business owners know that their team will go through various stages of success and development. Smart owners will recognize the different stages and take appropriate action to ensure long-term success.
Here’s my quick coach’s take on the most common stages of development where a business can be at risk.
New Plays (business strategies)
Most businesses need to continue to evolve their product and service offerings and how those products and services are delivered to their customers.
A family business needs to generate innovative ideas and be accepting of new ways of approaching their business.
One way to do this is to have annual meetings that involve strategic planning. Stepping back and taking a big picture view of the business and the market is critical.
Another way is to allow some of the younger generation in the business to make modest experiments with new approaches. This is so these new systems can be proven and gain the support of the older generation before being more widely implemented.
New Players (employees)
Every employee has its beginning, middle and end of value in the business. Smart family business owners know that sometimes long-term loyal employees will need to exit the business on the owner’s time frame, not the employee’s time frame.
These are always very difficult decisions to make. If the business owner is unwilling to make the changes, they can put the whole business at risk by leaving ineffective employees on the team.
New Leaders (managers)
Leaders and managers are what drive a business. Our family business had some long-term loyal employees who had risen to important roles in the business. At some point we needed to be willing to make the difficult decision of reassigning them into an individual contributor role and taking them out of the manager role.
The other important aspect of changing leaders is it gives your up-and-coming, talented new players a career path into leadership. Business owners need to be careful not to allow managers to stay too long in a position.
New Owners (executive leaders)
Last but not least, it’s important for a family business to have new executive leaders. Most of the families we work with are trying to develop and replace their executive family leaders with new executive family leaders.
Executive leaders are the people that can see the big picture of both the business and the family and help grow and develop up-and-coming leaders. They need to gracefully move aside current leadership.
Many times this can evolve into a board of directors and allow the current executive team to become mentors to the new executive team through board-level governance.
Finally in some family cases, like ours, it was time for the family to sell a family business to a new group of executive owners. This is an important option every family needs to consider if they are truly committed to the success of the business and its loyal employees and stakeholders.
Take Inventory and Take Steps
Nothing remains static forever. Set aside time to take inventory of your business and try to identify potential areas that are due for new growth and development. New growth usually involves a little bit of pain and discomfort. In the long run it is the right path for long-term sustainable success.
Our Family Business Scorecard is a simple, easy way to assess your family situation.
Play to your potential!
Pete Walsh is a demanding, courageous and playful Master Coach in Phoenix, Arizona. He is the founder of Peak Workout Business Coaching and the Family Business Performance Center. He can be reached at firstname.lastname@example.org.