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Focus Where It Counts for Family Business Success – and Longevity
No matter what industry you’re in or the dynamics of your team, operating a business is a multi-faceted venture. Family-run businesses not only deal with the complexities inherent of running a business, but they also deal with the added component of (sometimes complicated) family dynamics.
Deciding who gets a promotion and how much to pay that person could have ripple effects within the family, which could affect the business overall. Deciding who gets what share of ownership during the inevitable business transition could cause entire waves.
Then, there are more universal concerns that threaten continuity for any business, such as cybersecurity and the limits of outdated technology in a modern world.
Where should you focus your attentions as a leader at a family-owned business? These are the focus areas where neglect would be most consequential to success and business continuity.
Planning for the next generation of your business
If you’re too busy working in your business to get detailed about its future, that future is at stake. You must plan beyond five years down the road.
This means prioritizing succession and continuity planning as part of your strategy. Though you can conduct such planning on your own, bringing in a business consultant would help remove family-related bias from the equation. You would also benefit from that consultant’s experience optimizing those plans for better financial and operational outcomes.
It’s not enough to put these plans on paper, however. Part of preparing for the next generation is identifying and training those individuals you expect to take on greater responsibilities – and training them early. It’s also about mindfully selecting employees today with tomorrow in mind, even if that means hiring from outside the family.
Addressing family dynamics directly and professionally
We are human, and that’s part of what makes family businesses great: They’re relatable. However, our humanity can be our downfall if we let our biases cloud our judgement. Especially when it comes to situations that would otherwise be handled professionally and according to a rule book. It’s not easy to face business challenges as a family, but poor handling can have dire consequences for your operations.
The most successful family businesses don’t let sleeping dogs lie, and they take a professional approach to conflict. Protocols and policies that remove bias are essential.
Many choose to enlist external support so family dynamics don’t get in the way. For instance, they outsource certain human resources activities, such as managing payroll and onboarding and developing company policies. An outside expert’s opinion will carry weight with your team and ease the burden of difficult decisions and messaging.
Keeping up with essential technologies and digital capabilities
You don’t have to buy every new gadget or app that comes your way. That’s simply not in the cards for most family-run businesses financially, and it’s a fast way to waste funds on needless investments. However, closely consider those technologies that:
- Enable you to do business with your customers considering how their expectations of digital capabilities have rapidly changed.
- Meet your needs for interacting and collaborating with your employees and stakeholders given remote and hybrid work environments.
- Help you improve operations and do more with your existing team, such as automating manual administrative tasks and using operational analytics to find inefficiencies.
- Allow your business to thrive amid internal and external disruption, such as the sudden exit of a key employee or a global crisis.
- Provide meaningful data, particularly Key Performance Indicators (KPIs) you’re focused on, in digestible, readily accessible ways so you can keep a pulse on your business performance.
Protecting your business systems from cybercriminals
Cybercriminals today are targeting smaller businesses because they’re often more vulnerable. That vulnerability comes from the fact that many are on legacy systems that are easier to penetrate, their security isn’t as strong or sophisticated versus larger organizations or companies on the cloud, and they aren’t monitoring their systems closely enough to identify a breach in time.
Most family businesses would struggle to recover from a cyber incident. However, battening down your own security isn’t as simple as hiring an IT person. Your organization’s entire cybersecurity program would likely be too much for an individual to handle, especially with today’s digital-first business environments. This is one focus area where outsourcing would make a world of difference. Cybersecurity consultants know what to look out for in your industry and at your size, and they can provide everything from a one-time risk assessment to constant system monitoring.
Knowing your finances
Successful family businesses have an eye on their finances, conducting financial reporting more regularly than once a month. This enables them to catch irregularities and potential concerns closer to the point of the incident.
This doesn’t mean you need an employee who is constantly piecing data together in the background. It means having Business Intelligence (BI) technology with dashboards, customized to show what you need to see, when you need to see it. It also may mean seeking advice from a finance and accounting consultant, or even outsourcing specific accounting and finance activities to ensure accuracy and move your goals of financial visibility forward.
Setting Your Family Business Up for Long-Term Success
As a business owner, you’ve probably dealt with many challenges over the years. Every business has its own set of unique challenges. But operating a business can be even more difficult for family-run businesses when dealing with the added component of family dynamics.
No matter what industry you’re in or the dynamics of your team, it is critical to focus on areas where neglect would be most consequential to the success and longevity of your family-run business. By planning for the future, tackling family dynamics professionally, staying up to date on technology trends, protecting your business from cyber threats, and gaining a thorough understanding of your finances, you can set your family business up for success – now and for generations to come.