Family-Owned Business: The Pressure to Succeed

Family-Owned Business: The Pressure to Succeed

Small businesses typically have high failure rates. Why is that? With strong competition from the market place, there can be intense pressure in running a family-owned business. Most times there is a feeling of responsibility to previous generations who worked hard to build the business. Those business owners can feel town between doing things a more modern way or do they stick with tradition?

As younger generations become of age, take interest in working in the business, they often want to make modern changes. Adopting new ideas. Older generations often hold onto the past. So now what? How do companies and families move forward in this new era?

There are no right or wrong ways. Every company will handle this in their own unique ways. However, here are a few things to keep in mind so the family and company can strategically plan for the future to help the company succeed for years to come.

First, is there a succession plan? If an owner or founder has one person clearly in mind to take over when they retire, the transition can be simple. If there isn’t a process, well then it can be complicated. There needs to be conversations about succession, who takes over, what’s the process, is there a clear path to transferring power in the family business. Are the right people in place to help with this transition? It’s important to have these crucial conversations.

Second, is there a clear vision for the future of the company? In an article by Louis Barnes and Simon Hershon in the Harvard Business Review, they discussed just that. However, in a different way. ”
Our studies, however, suggest that the healthiest transitions are those old-versus-young struggles in which both the family managers and the business change patterns. For this to happen, “the old man” must face the decision of helping the company live even though he must die. If he can do this, the management of transitions can begin. In effect, a successful family transition can mean a new beginning for the company.”

Third, clear communication. Based off of Barnes and Hershon’s comment. There needs to be conversation. Open conversation with all involved family and non-family members involved in the succession process. It’s important for the older generations and later generations to talk, discuss, and come to an agreement of the future vision for the company. The conversations need to have heart. If we approach situations with the wrong emotions, mindset and enter them in anger, it is unlikely the conversations will end the way they are intended to. So go in with a positive mindset and with an open mind. On the flip side, it’s vital and important that family members learn how to keep personal feelings out of the decision-making process and think about the operation of the business first during working hours to have long-term success. This is often the hardest to do, but the most important. Hurting one’s relationships is never an outcome anybody wants. So make sure there are boundaries in place.

Another key point is to make sure the space is safe. When people feel like they can speak openly and freely without consequences they are more likely to speak with honesty. This can keep the dialog going.
A great resource for these high stakes conversations is a book called Crucial Conversations by Kerry Patterson, Joseph Grenny, Ron McMillan and Al Swizler.

Wishing you and your family successful steps in the right direction.

If you are leading a family-owned business and know you may need some extra coaching to get your business to soar, CONTACT ME.

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