What you may ask is he talking about?  You may be reading this and be saying...

“That title makes absolutely no sense. We all know the real threat to our long-term success lies outside these walls.  Competition hums around every corner and we must do everything we can to strategize, plan and execute if we are going to continue our legacy as a successful family business.” 

And so it goes…we head off and do a marvelous job focusing on strategy and planning and execution, all the while ignoring the unique challenges we face as a closely held family business.  Then in the end, a full 90% of our family businesses will fail by the third generation. Don’t be one of them!

Yes, of course it is important to run your family business like a “business”.  Yes, you need to focus on strategy, operations, employees, customers and profits.  These are just a few of the many things you must do to run a successful company, but there are additional areas that are even more important in a family owned business.

Despite your best efforts, the statistics still are not in your favor.  Interestingly, I learned from Dephi21 Advisors family business expert Scott Friedman that it isn’t poor financial planning that takes most family businesses down. The vast majority fail due so because of poor communication, lack of trust and/or unprepared heirs.

The lesson here is clear. You can do all of the financial/legal planning perfectly and still fail.  Why? The real enemy may lie within, lurking in the shadows, right under our nose. When we avoid having candid and yes sometimes difficult conversations with family members we start down a path of dysfunction that is hard to leave. 

It doesn’t have to be that way, you can do better by…

• Creating a culture of communication that encourages meaningful discourse and healthy disagreement
• Learning where each family member’s unique strengths lie and matching them to the right roles in the company
• Focusing on fit, not convenience. Don’t try to put a round peg into a square hole. You can’t force fit. Who is the right person for each role?  Are they interested in that role? Do they even want to be in the family business?
• Creating family councils, charters and other tools that are focused on embracing good governance best practices in your family business
• Accepting the fact that succession takes time and effort. Succession must be a process, not an event. Period. Exclamation point.

If any of this rings true in your family business, please join me and Scott Friedman, founding principal of Delphi21 Advisors and executive in residence in family business at the University at Buffalo Center for Entrepreneurial Leadership, for a free webinar on May 30^th at 12:00p.m. EST where we’ll share “Family Business Success Factors”.  For more information and to register visit us at https://ubcel-87692f.pages.infusionsoft.net/

Your people ARE your competitive advantage

We live in a world of increasing complexity that finds us inundated by new competition at every turn. We can talk about other businesses, but much of the competition we face is simply in getting potential customer’s attention in the busyness of today’s world. Our customers are inundated with information and digital marketing experts estimate that most American’s are exposed to between 4,000 and 10,000 advertising impressions each day. How do we gain competitive advantage in today’s complex world?

We need to start by asking ourselves, “what constitutes competitive advantage?” The textbook answer might include quoting Michael Porter and having a long discussion of strategy. If we start there we might conclude that there are only a few true ways to gain competitive advantage. We can start a list of potential strategic advantages such as cost leadership, innovation and customer intimacy. Yet any and every strategy becomes moot without the ability to execute it. Whatever your strategy, I might argue that the only real competitive advantage that you have lies in your people and your ability to build a great team. You may have great ideas, interesting products and services that people need and want, but ultimately your people conceive, build, sell and support them. It takes a great team committed to your purpose and vision to be truly successful.

Perhaps I’ve got your attention now or perhaps you are simply saying to yourself “no kidding Sherlock, nothing new here, I know that.” We may "know that", but most of us do a miserable job identifying, hiring, on-boarding, training, coaching and keeping great people. We all too often take them for granted or worse, we rely on our best to carry the rest.

If you don’t believe me, let’s do a quick gut check. Do you truly have a team all pulling together towards shared goals or do you have a few “A” players carrying the ball for the rest of your team? We all believe that we need a great team, but few of us do the work to make sure it happens consistently. Take this little test and answer this seemingly simple question. “Would you enthusiastically rehire every member on your team?” Note, I underlined enthusiastically for a good reason. It is the ultimate “gut check” for any business owner. I have never had a leader be able to answer this question affirmatively. Why is that?

I think it is because we get complacent. We get lazy when everything seems to be going well. What you may not notice is that it is likely that a few key players on your team may be carrying the weight of the work. They will do this... willingly, quietly for a period of time, but eventually discontent will set in. Herein lies the real challenge. The handful of your best team members or your “A” players can go anywhere they want, any time they choose. You are managing a ticking time bomb and you don’t even know it. You and your business are incredibly vulnerable. What can you do?

There are many ways to build a great team that will give you the ultimate competitive advantage in today’s complicated world. Some ideas to consider:

• Hire for culture and fit first. You can train for skills, but you can’t make someone align with your core values. Trust me, I’ve tried, it doesn’t work. Hire people that believe in your values, purpose and vision for the future.
• Toss the annual reviews and make critical conversations, transparency, communication and constant coaching part of your culture. Yes, annual reviews have their place in business and are often a HR requirement, yet many of us save everything we should have shared (both praise and constructive criticism) regularly to a once per year review. It is fair to no one.
• Build a virtual bench and have a list of people you are ready to “hire away”.
• Engage in the ultimate interview to identify potential future team members.
• Build a great work environment anchored in trust and accountability. Always assume people will make the right choices but be prepared to hold poor behavior or performance accountable quickly. Anything less and your best team members will see a world that looks very unfair to them.
• Focus on fit, not convenience. Don’t settle when hiring. Create the right job description and wait for the right person. Never hire for convenience or the need to fill a position at this moment in time. Wait for the person that fits.
• Be patient. Treat people well when they make mistakes. We all make mistakes and your ability to have a level of patience and grace in these moments will build loyalty to you and your team.

I have so much more I’d love to share with you in this area. What are your thoughts on the subject? Join us on April 24th from 8:30 to 9:30a.m. for a free webinar, “Warning! Your top people may already have one foot out the door” where we will share next and best practices on building the ultimate competitive advantage by building a great team.