Growing Your Family Business Requires Teamwork
BOSTON — When we start out in our family businesses, we know all the answers and seldom seek advice. We keep strategy in our heads and rarely see a need to share it with others. Family members are managing their own areas of responsibility with little overlap between them. We’re able to operate pretty effectively within our silos.
But then “growth” happens. When the business begins to grow rapidly, we begin to realize we can’t continue to do everything ourselves. We need the help of others and begin to openly share strategy and decision-making with others.
Signs that we need to involve others include unfinished projects, haphazard changing priorities, missed deadlines, low employee morale, increased turnover, reacting rather than planning and missed opportunities.
For the first time, we need to develop a management team by delegating responsibilities and sharing strategy with others outside of the family. Why take so long to develop a team? Perhaps we feel we can do it alone, or that nobody else knows the business as well as we do. Or, maybe we think it’ll take too long to get others up to speed, or we have a lack of confidence or trust in others or fear a loss of control.
Sometimes we need a disruption to motivate us to begin forming a team and increase employee participation outside of the family. For instance, it might be the beginning of consolidation within your industry as small- to midsize businesses are acquired and folded into larger conglomerates.
Knowing you must grow your business to remain competitive in a way that involves mergers and acquisitions can require you to go outside for management expertise and formalize strategic planning. On the plus side, it means more employees can be invited to participate in the planning process and become more actively involved in the implementation of the strategy.
To start, you may want to have family meetings to discuss the direction of the company. Before these meetings, the direction of the company was implied but never formally discussed within the family. Then, prepare a formal strategic plan that begins with a brain dump of the group members’ knowledge and strategy from their heads onto paper. This provides a shareable document for the first time.
Then, begin sharing company direction and performance outside of the family with employees through a quarterly letter. Don’t confuse sharing information with loss of control issues. Sharing is inviting participation, not decision-making. That comes later.
Committees can be formed to involve more employees outside of the family in executing the strategic plan. Not big on committees? You might begin with a Strategic Planning Committee, an Executive Committee, a Manager’s Meeting and an Operations Committee. These can be a powerful way to develop, implement, and communicate new ideas.
Begin sharing detailed financial reporting to measure company performance, beginning with more detailed financials for management and top-level summarized information at the staff level to build significant trust throughout the company.
Hiring outside non-family management can help bring in some formal financial reporting and organizational structure. The challenge is finding people who have the right chemistry not just the right skills. Working with outside consultants on special, one-time projects helps move projects faster than you can do on your own. They also provide an outside perspective from a wide range of experience with different companies.
Finally, consider forming an advisory board comprised of people who are genuinely interested in a long-term, slower, more measured growth plan and who can bring in very valuable ideas and experiences.
As your business grows, you will become less hands-on and delegate more responsibility to others around you. As entrepreneurs, at first it can feel uncomfortable to share strategy and decision making with others. It can feel like a loss of control or diminished power. However, it’s actually more powerful when you get to the point where you realize inviting others into the process makes the company more successful (and enjoyable).
Here are 10 steps for developing your family business team:
- Family meetings. Discuss general direction of the business and get family on same page.
- Strategic planning. Formalize planning process. Brain dump information from head into written format.
- Players. Determine roles for family members, gauge interest level.
- Strength of family members. Are they good leaders or just good managers.
- Skill gaps. Identify skill gaps and how to close them.
- Non-family managers. Use outside talent to bridge skills gaps and experience levels.
- Formation of committees. Share decision-making outside the family.
- Sharing financials. Show key financial information to those outside the family.
- Outside advisers/consultants. They bring specific short-term skill sets and experience.
- Advisory board. Objective advice from others with no vested interest in the business.
Source: Fambiz.com (Northeastern University Center for Family Business)
Copyright 2021 The Business Journal, Youngstown, Ohio.