Keeping your family business strong requires diligence. Let’s take a look at five best practices for families running a business together.
Strategic Planning
Unless you know where your business is headed, how will you know what is required of future leaders to help get you there? For some, the process of strategic planning may be a half-day workshop preceded by some homework. For others, it may be a multi-day process. One size does not fit all. Given current economic challenges, you should have a plan that allows for flexibility. And the key is to assure implementation. Making it happen requires accountability — someone inside your organization who will champion the project and be held responsible for its implementation.
Review Roles and Responsibilities
Typically job descriptions are created based on perceived needs within an organization. As people fill those positions, however, there is often both a change in need within the business and the recognition of other skills and interests that people possess and can utilize in their roles. Do an audit of roles and responsibilities. It’s a chance to review current written descriptions and compare them to how time is actually spent. The result may require some fine tuning of roles and responsibilities, but people will now be doing more of what they are better at — to the benefit of the company and the employee.
Corporate Governance
A key contributor to the longevity of family enterprise is effective governance. Long gone are the days of dad pulling out his green American Express card at family dinners and claiming they were board meetings. Today’s governance structure can take many creative forms, but at its core is having people involved whose skill sets match the critical success factors of the company. If you don’t have one, consider implementing a governance structure. If you do, review it to make sure it’s as effective as it should be.
Leadership Transition
Often we make the assumption that simply because our sons and daughters are working with us, that one of them will be the next leader. While that may be so, consider all leadership options — both family members and those from outside of the family. The needs of the business today and going forward may be very different than in the past. As such, the needs for leadership today might be different. Matching the leadership needs of the business with the attributes of current and emerging leaders is critical to the success of the company.
Ownership Transition
Decisions around ownership transfer are complex — is it equal for all children? Does ownership transition only to those who work in the business? Is ownership to be gifted or purchased or, perhaps, a combination of the two? Must there be a minimum age requirement? Must there be a direct family connection? What if a family member shareholder exits the business? The list goes on and on. There is much to talk about and consider.
Do this best practices “checkup” on your family business and you will help to keep it fit and healthy this year – and in the years to come.
David Karofsky is President of Transition Consulting Group, Ltd. He has over 20 years of experience coaching executives and working with companies across the globe to excel, grow and outperform their competition. The recipient of multiple achievement awards, he received his A.B. from Bowdoin College, an Ed.M. from Boston University in Counseling Psychology and a MBA from Northeastern University. David can be reached at [email protected] or 508.875.7751
