All business leaders face the stresses of leading an organization; but owners of privately-held, family-owned businesses are in a unique position. Not only do they need to balance the rigors of running a company, defending market share, and dealing with regulatory issues, they must also simultaneously deal with family dynamics. Imagine having the dynamics of Thanksgiving at your office every day.
“What keeps owners of family-owned businesses up at night?” I asked this question at the Association of Dressings and Sauces Meeting. Here’s some of what we talked about in the meeting.
We have worked with many family-owned businesses, some going back as far as five generations, and we have found that many of the CEOs are most worried about “screwing up the family business.” Especially in multi-generational businesses, no one wants to go down in family history as the one who ran their great-great grandparent’s business into the ground. If you are the CEO of a privately-held, family-owned business, here are five tips for success:
- Be Proactive – Don’t wait for opportunities to come your way; seize your opportunity for growth now. Success doesn’t just happen. Companies that anticipate the needs and demands of their customers benefit in the long run, while those who react end up missing out and falling behind. Now is the time to develop a strategic plan for growth and execute it.
- Don’t be afraid of change – Rocking the boat can be difficult, but sometimes change is necessary in order to succeed. Today’s world is different from when your company was first founded; you’ll need to adapt or risk becoming obsolete. Take a good look in the mirror and evaluate your company from a strategic, objective perspective. Does it make sense to keep operating in your current market? Do you have the right team members on board? You may discover you need to make some tough choices, like selling off a division of your company, or hiring an outside expert over a family member, or simply changing a process. Although it is challenging, being honest about your current situation today and making the best decision for the company will be worth it in the long-run.
- Consider all your Options for Growth – Organic growth, adding new sales people, opening new offices, and developing new products or services, is the most commonly used tactic for growing a business. But organic growth is just one of five key options for growth available to you. Companies should consider organic growth alongside external growth, minimizing costs, exiting, and doing nothing. Thinking outside the box can spark innovation in the company.
- Think about succession planning early – Even if you’re not thinking of exiting for a long time, eventually, this is something you will need to think about. Somewhere down the road you will either need to pass the company onto the next generation or sell. Considering these options while you have time to determine the best course of action is wise. If you plan to pass it on to your heir, it takes time to groom the next generation. For those thinking of selling, you must think about your goals and desired outcomes from a sale: Who is the right buyer for your company? Considering these options earlier rather than later will give you more flexibility and ensure that you have the outcome you need to succeed and strengthen your company!
- Get an outside perspective – An outsider can give you an objective perspective as well as help balance the family dynamics. Sometimes it’s easier to hear things from a third-party than from your family member. During times of change and strategic growth, it can be beneficial to have a third-party orchestrating some of these changes.