Virtually all family companies start as entrepreneurial enterprises, with one hard-working leader aided by family members who chip in time, talent, capital and encouragement. The ones that grow into stable, prosperous companies do so largely because of family dedication to the dream and a willingness to work hard and delay material concerns until the business is really up and rolling.
Then the founders retire, with management and ownership passing on into the next generation, which is when a lot of family businesses start to behave like non-family enterprises. The entrepreneurial fire in the belly is replaced by family members’ cold concern for the bottom line and the annual profits report.
While it is prudent to keep an eye on resources in order to preserve the business for the family’s future, negating the very positive differences that make family businesses so special would be a pity. What can family businesses do to hold on to those wonderful characteristics that gave them life and the prospect of longevity? Here are a few suggestions:
- Keep innovating
It makes good strategic sense to stick to the business you know and that you're known for. But venturing into uncharted waters may yield unrealised dividends.
Create an atmosphere of curiosity, experimentation, research and development within the business and the family. Challenge members to think of new ways to deal with traditional problems, and keep putting out the call for new ideas. Perhaps even bait family members with rewards for contributing improvements that make the business stronger and that keep its spirit alive.
- Keep cultivating family entrepreneurs
The high that is generated by an entrepreneurial effort brings with it a mixture of enthusiasm, fear and satisfaction that is unparalleled, and has carried many family companies through some if their toughest and most vulnerable years.
In fact, why not urge the upcoming generation to create subsidiaries or related businesses from the parent company? Carefully cultivating new family entrepreneurs would not only strengthen the family's overall marketplace position, it can also take the pressure off the succession chain.
- Keep marketing the business to the family
Continuously promoting the attributes, and promise of the venture to those family members closest to the business helps to keep everyone’s interest alive, and commitment high. Indeed, incorporating this into a succession planning strategy could facilitate selecting and transferring leadership to a competent and committed next generation of family members.
- Keep family members in the know
Sustaining awareness that the business is a living, breathing feature of the family's life, present and future fosters stronger bonds and family pride. Keep the family informed about the business's happenings and progress by putting out a newsletter, having an annual family retreat and tour of the plant, and perhaps making summer jobs available to nephews and nieces.
- Keep the community spirit alive.
Family businesses are renowned for being committed not only to the welfare of the family that owns it, but also to its employees and its community. Such cultures then usually attract a similar commitment in return, contributing to the uniqueness of family firms and their prospect of longevity.