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Family can test your patience at the best of times, and going into business with your nearest and dearest can prove to be even more challenging.
While the next generation of business leaders are more confident, ambitious and better prepared than ever before, a recent report from PwC has found that many old challenges – such as skills, succession and scale – remain. Factor in the usual family tensions, and add to this a wave of digital disruption, and you get a raft of issues that could do long-term damage to a business if not managed correctly. To ensure that your family business stands the test of time, here are five concrete tips that will help you navigate your way to success:
Don’t always keep it in the family Sometimes, outside perspectives are the key to building a resilient and successful family business. Appoint non-family members to key positions. Striking a harmonious balance between professional management, responsible business ownership and a healthy family dynamic allows a business to thrive. Having non-family members as part of your leadership team will act as a circuit-breaker to ensure decisions are made in the best interests of the business, and can also help remove emotion from difficult situations. By doing this, you get the best of both worlds: a company culture founded on teamwork and loyalty, and the benefits of diverse perspectives.
A communications framework Transparency is one of the cornerstones of a successful family business, but it can often be pushed to the backburner as a result of conflicting priorities. Open communication is the catalyst for removing tension as well as ensuring everyone feels safe to express their views and be included in important business decisions. But it doesn’t just happen, and you need to create a framework to manage it. Developing a Family Constitution will help identify many of the core issues within the business and the family. Unlike a Company Constitution, a Family Constitution isn’t legally binding, instead, it acts more like a code of conduct that ensures all family members remain on the same page when it comes to business operations, and it provides a dispute resolution platform.
Don’t let tradition get in the way of progress Don’t rely on longstanding traditions when faced with a rapidly evolving business landscape. The phrase ‘that’s how it’s always been done’ should be banned! Progress can come in many forms and can be as simple as embracing new technology or finding different suppliers to create efficiency. Future-proof your business and create a game plan to tackle digital and other disruptive trends and drive growth. A strategy for digital investment and protecting existing revenues should be non-negotiable.
Craig Edmondston from Snap Rockdade shares his family business story
Don’t add financial stress to the mix It can take a lot to get a business off of the ground and asset security is usually required by traditional lenders to secure the funds to grow a business. Along with this comes the risk of inherited debt, especially for next-generation family business leaders. Ensure only the wealth generated by your business is passed on and not the debt. Fintech companies like Prospa offer short-term unsecured loans with flexible repayments tailored to an individual business.
You are as successful as your succession plan Plan for the future. A succession plan will save you future headaches and heartache. While it may seem like a lot of hard work, with a myriad of financial, tax, legal and emotional issues to consider, an effective succession plan will prove invaluable in the long term. Everyone will know where they stand. More often than not, businesses benefit from well-thought-out succession plans and lengthy handover periods. If the task is too daunting to tackle alone, engage an external consultant to help you create and implement your succession strategy.