With National Family Business Day on 19 September 2015, it’s the perfect time to ask: what are the secrets of success in a family business? As Matthews is a family-owned business, here are some of our insights.
What does your local café have in common with Haigh’s Chocolates, Maggie Beer, Taylors Wines, Coopers Brewery or even Myer?
It’s highly likely that they too started life as (and maybe still remain) a family business.
Australia has its fair share of family businesses. According to research by Deakin University, 24% of the top 500 private Australian firms are family owned. Further afield, the London Business School reports that 33% of S&P 500 companies and 40% of Europe’s leading companies are family owned.
Family businesses vary enormously in size, and some are, in fact, large global enterprises. At the other end of the spectrum, many family-owned businesses employ between 20-200 people and have one location — which may be online.
Whether local or multinational, a staggering 70% of all Australian businesses have family ownership in common. And with September 19 marking National Family Business Day in Australia, it’s a timely opportunity to provide some insight into what makes a successful family business. Here are our top 4 thoughts…
- Call on external skills and expertise to build the family business
Ask family business owners about their strengths and challenges, and you’ll quickly have an insight into their uniqueness. In a family business, everyone is dedicated to the business’s success. There’s a degree of trust and loyalty to the business — and each other — that simply cannot be replicated in the c-suite of a corporate entity.
But dedication is not a substitute for skills and experience.
And while every family member generally knows each other’s strengths and weaknesses, they may be reluctant to acknowledge that they don’t have every single skill needed to run a thriving business!
INSIGHT: Build a strong team that includes people from outside the family. Consider the skills and experience lacking in your current organisation. It’s not uncommon to have managers with marketing skills and financial expertise to help guide the business’s direction.
- Create a framework to support you through disharmony
Even the most harmonious family business will go through periods when not everyone is in agreement on the company’s future direction. One or more family members may wish to expand or pursue a market opportunity that the others don’t agree with. As in any business, disharmony can impede successfully running the company. Communication is paramount, but separating business and family can be a challenge when there’s conflict.
INSIGHT: Resolve this challenge by establishing a family business council. It acts as a democratic body and includes all family members — and embraces those not directly involved in running the business. This council allows the family to express their values, hear regular updates on progress, and supports discussion of broader issues such as succession and key-person planning. It can also act in an advisory role to the board of directors.
- Invest in professional development
Those in a small family business can find it difficult to extract themselves from its day-to-day running. While this can be great in the short-term, it can stunt the business down the track. Being busy, busy, busy means it can be difficult to keep up-to-date with change or build extra skills needed to develop the business. Regardless of the type or size of business, investing in development is critical for success.
INSIGHT: Invest in education and training for your team so the individuals and the business can benefit from new skills and capabilities. Where possible, invest in business coaching to help family members stretch their thinking on new opportunities and possibilities.
- Develop a succession plan
Don’t put succession planning on the back burner. Succession planning is more than just thinking and agreeing on the next family member(s) to take up the reins. In some instances, there may be no eligible family successors, which leaves you with the challenge of how to capture and instil your values and ethics into the business’s future.
INSIGHT: Develop a comprehensive succession plan, which embraces:
- a strategic plan for the company
- both contingency and risk management plans
- a retirement plan for family members
- development plans for prospective successors
- and a plan to instil family values and culture into the business
All businesses have their strengths and challenges, and family businesses are no exception. What is remarkable is that so many of Australia’s successful businesses have started out as family businesses and continue to make an invaluable contribution to the Australian economy.
You may also find this blog on the factors that make family businesses so successful interesting.
Matthews is a proud member of Family Business Australia, the peak body for family business in Australia, a sector which accounts for almost 500,000 businesses and 50% of the Australian workforce.
Photo credit: FreeImages.com/Tcey