Family business challenges in the ‘new normal’
Family businesses typically operate with longer-term horizons in mind, allowing them to incorporate stewardship thinking in their strategic decision-making. But even with this longer-term perspective, family businesses are not immune to huge challenges we are facing as a result of Covid-19.
As an adviser to family enterprises across the UK SME sector, I have seen an increasing amount of tension in businessowning families recently. What makes a family business unique is that it’s your own time and money that has been invested over your lifetime into your business. This is particularly challenging for family business-owners aged over 70, many of whom have been locked down and unable to visit their business. They believe that they might never be acknowledged for all their hard work, while the younger generation may be enjoying their chance at leadership, after longing for it.
So what can the owners and directors of family businesses do to survive, and thrive, through this time and maintain health in both the business and the family system as we emerge from lockdown? Additionally, how do you stop the challenges in the business from spilling over into family life? Firstly, get in sync amongst the family ownership group. In my experience, a crisis is a good time to introduce farreaching, long-term change, in both the family and business systems. This can sharpen the family’s vision, leaning on the lessons from the past while asking: “How will what we do today work for us tomorrow?”
Keeping that question in mind, good governance is part of the answer. Strong governance in the business means making the right decision about the right issue at the right time with the right people. Aim for alignment in your decision-making at this time, use your non-family directors well, independence is key to getting in sync as family owners and make sure these decisions are properly documented, in case of future challenge. Governance also applies to the ownership group. In a time of crisis, a family business should expect owners – working and non-working – will want more insight into decisionmaking and to offer their “value” where appropriate. A board should embrace their commitment and use it to build good family governance protocols for the future. Protocols also extend to customers.
Many are more cautious now, so how can you harness tech platforms to engage in a strong two-way dialogue with them, focusing on what they need from you right now? How might the relevance of your “family-ness” give your brand a competitive advantage amongst your customers at this time?
Let your next generation learn and shine as emerging leaders at this time; they are likely to want this opportunity. Allow them to articulate what they see as their value, their human capital – either through leading a digital audit, being a main touchpoint for your valued employees, your supply chain, your subcontractors or representing your community and charity work. It’s especially important to reach out to all of stakeholders that you suspect need to feel heard at this worrying time, take a pulse on what is going on, and report it back to the board. Putting a younger family member into this liaison role could serve all parties well. Let them attend funding and diversification discussions; they may have a useful, diverse perspective.
Finally, look after yourself and your family. Create boundaries around your timings and locations for hard decision-making. Not at the kitchen table, please! This is especially important in co-preneur (husband and wife) businesses. Success to most family businesses means both warm hearts and deep pockets, as this is a time for potential burnout. Be realistic and ask for help – families in business are notoriously bad at this, so bear this in mind! Mairi Mickel is a family business adviser with www.businessfamilies.co.uk
A crisis is a good time to introduce farreaching, longterm change