Founders must lead the way! Part 1
GUIDING family businesses to lasting success involves balancing family ties with business goals. As caretakers of your enterprises, you understand the challenge of maintaining family harmony while navigating the changing business landscape.
The “Family First” mindset is appealing, yet it brings complex challenges (refer to last week’s article on Family First).
It is crucial to recognize that managing a business is impossible six feet under the ground. This exploration doesn’’t just unveil the reasons for family business risks but also outlines a plan to fortify against disruptions. The takeaway is simple: take action now to ensure a successful future.
Understanding the Motivation Behind Risks
The magnetic pull of the “Family First” ethos stems from a genuine desire to weave familial bonds into the fabric of your business. However, beneath this familial harmony lies a labyrinth of challenges.
To comprehend why families persistently take risks, it is imperative to seek wisdom from external sources. Advisory boards or seasoned mentors bring a fresh set of eyes to the table, revolutionizing decision- making without jeopardizing the delicate balance of family relationships. This injection of external insights serves as a strategic move, enhancing the resilience of businesses with intelligent, adaptable plans.
The Role of a Family Business Consultant
As a family business consultant, I often confront a common challenge — on one hand, the tenacity of business owners when seizing money-making opportunities, and on the other hand, their indecisiveness in committing to change.
Acknowledging the real risks, many persist in adhering to practices reminiscent of their business’s infancy. In this context, I echo the sentiments of a respected colleague, Steve Legler, one of Canada’s foremost Family Business Coaches, shared during our international webinar last Saturday.
Steve likens the founder’s journey to a transformational sport, where the transition from a solo athlete, a great golfer mastering an individual sport, to being part of a basketball team is a pivotal evolution.
Transition from a Great Golfer to Part of a Basketball Team
When founders start the business, they are practically a one- man team armed with nothing except pure grit and hard work — a great golfer navigating the nuances of an individual sport. However, as the business transitions to the offspring, it metamorphoses into a sibling partnership — a shift akin to becoming part of a basketball team.
The key is for the founder to recognize that the business is now a team sport, where cohesion and collaboration are paramount to winning games.
Breaking the Cycle: Ways to Succeed
As stewards of your business legacies, breaking free from potential risks demands strategic planning and decisive action. Here are the urgent key steps to secure a disruption-free future:
Bring in Outside Managers
The infusion of professionals from outside the family for pivotal roles within the business ensures that decisions are anchored in skills, competence, and fairness. This strategic move mitigates the risks of nepotism and favoritism, building a robust foundation against internal conflict.
Good managers bring fresh perspectives when it comes to managing the business. With empowerment, they can also provide unbiased and objective value to family members.
Plan for Succession
Crafting a comprehensive succession plan is akin to sketching the future of your business. This plan must meticulously consider family ties alongside the skills required for effective leadership.
A forward- thinking approach prevents internal power struggles, ensuring a seamless transition that preserves the stability of your business. Succession planning is not merely a formality; it is a strategic initiative to ensure the longevity and prosperity of your family business. (To be continued in Part 2)/