“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 30th 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/