Q. I plan to start a family-owned business. What are some of the areas that will probably be most sensitive
A. Family-owned businesses can be a disaster if they are run as a dictatorship. There are numerous well known cases where seemingly successful businesses ended up "on the rocks" as did some marriages and other family relationships.
Thankfully these scenarios are the exception rather than the rule. However, since you are contemplating a clan-centered business, you should be aware that the family-owned business presents special challenges to the family-based management team. Some possible means to avoiding such concerns are:
1. In every small business the chief executive should have a set of personal as well as company goals. However, for a family-owned business, each member of the family management team should have a written list of his or her goals (both personal and company), then this family management team should jointly create a set of company goals from these lists.
2. Chances are that most, if not all, of your management team (board of directors) is all family as well. That’s OK, but you should also have one or more outside advisors to challenge your decisions and make sure you are doing your homework. Otherwise there are chances you could be missing out on potential profit opportunities that an inbred family "board" won’t see.
3. According to Scott Clark, "The Company Doctor", "If the CEO of such a business keeps all the power to himself it may yield only spoiled apples, sharing power in a family business can lead to applesauce, while splitting it wisely may give you apple pie".
4. Don’t try to share responsibility for the same tasks, projects or programs. Instead, split the power by giving different family management members responsibility for different parts of the business in accordance with the organization chart. Your goal should be to expand each member’s experience and expertise so they can grow with the business.
5. Make certain that all members of your management team are qualified individuals. If it turns out that none, or just a few of the family are qualified, so be it. Don’t add family members to the "team" just to be adding them.
6. It’s easy for family meetings on the business to degenerate into informal get-togethers, but it’s a big mistake. Keep your business meetings formal; some with just family, some with the rest of your management team and perhaps some with your financiers. At least once a year hold a strategic planning session. If possible pick a location for this session off site from your office. Establish an agenda where all family management members have the opportunity to help plan/assess where the company is in the market today; where it’s competitors are; where the company should expand and grow – along with what the anticipated bottom line results will be – how you can make it happen and how you will monitor the results
The keys to family-business prosperity, in addition to a strong strategic plan, are a strong foundation of family communications and trust. Without those basic elements, lasting success and legacy don’t have a chance.
Management Advisor Marketing Advisor Business Communications
JWB Interest, LLC 2012 All Rights Reserve
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