According to the Family Business Institute, 88% of current family business owners believe the same family or families will control their business in five years; however, succession statistics undermine this belief. The statistics are concerning: It is estimated that only 30% of family businesses will survive into the second generation.
What’s to blame for this disconcerting data? Family business experts say the most common reason for failure is the lack of family business succession planning, though there are a host of other issues and situations which require careful attention and due diligence to maintain a healthy and successful organization over the long-term. As a busy family business owner, how can you run your company and ensure that it will survive and thrive? This requires long hours and hard work, so it may be time to consider hiring a family business advisor.
Why Hire a Family Business Advisor?
These advisors understand that family businesses are uniquely complex and have the training to tackle most of the problematic issues that arise in family business, such as succession, conflicts and communication problems.
Many family business advisors come from a variety of professions such as law, psychology, and financial planning. Depending on your needs, you’ll want to engage family business advisors from across all disciplines and have them work together to ensure that your business is moving in the right direction, toward future stability and success. While your business may be doing well in the “here and now,” you never can be too prepared for the future. It’s critical to have an ongoing plan in place to manage and mitigate any risks during a leadership transition or other major event. Having trusted advisers, who understand business and family ownership dynamics, and can advise you on not only business issues, but also interpersonal challenges and conflicts that exist between generations of the family, can be the essential advantage in charting the path forward.
Following are five ways in which a family business advisor(s) can help:
Strategy and Planning. Your business strategy must also account for the unique needs of the family – including succession and financial planning, long-term management, tax structuring, and legal matters. Trusted family business advisors can assist you with this planning, helping you to determine the optimal strategy and make the right decisions. They can also help you evaluate and develop your company mission, values and goals, ensuring that all of your planning ties back to these positionings.
Structure and Governance. A carefully-organized business leadership structure is essential when it comes time to discuss sensitive issues such as ownership shares, rights and responsibilities, the competence of family management, and agreeing on a strategy that is best for both the business and the family. A family business advisor can help you develop and communicate a mission, vision and values that align with your business and family goals, as well as implement a conflict of interest policy and define the roles of family member shareholders, family council and a company board of directors, in order to maintain structure and preserve family harmony.
Succession Planning. Your succession strategy should be aligned with your business goals to ensure the future continuity and performance of the business. A business advisor can assist you with developing a formal succession plan, which incorporates a business valuation, a buy-sell agreement, estate plan, and other necessary policies when transitioning your business to the next generation.
Leadership Development. Many family business owners express concerns about the lack of bench strength in their companies to replace key management personnel. A business advisor can help you map out the future needs of your business, aligning the abilities and potential of your current employees to determine which position they should be primed for. Those individuals should be put on a defined career development path so they can meet the necessary requirements and be ready with the skills and confidence to take over the reins.
Growth. Family business advisors can help you assess and reassess operations and potential for growth in an increasingly competitive landscape, and assist with developing and implementing growth strategies that are specific to your business to obtain a profitable return on investment.
The most successful family companies are those which maintain a good balance between professional management, responsible business ownership and a healthy family dynamic. Experienced family business advisors have a deep understanding of the unique challenges of these enterprises, and can work closely with you to discover the opportunities and navigate the challenges as they look to the future success of the business.
To learn more about how a family business advisor can help you in your business planning and strategies, please contact me with questions at firstname.lastname@example.org or 732-747-0500.