Ensuring the longevity and success of a family-owned business is a goal shared by most entrepreneurial families. Achieving this goal involves not only running a profitable business but also professionalising the family's ownership structure. In this article, we will explore the key aspects of professionalising family business ownership and why it's essential for the sustainable growth of both the family and the business.
1. Prioritising Relationships and Policies
Addressing emotional issues solely through structural solutions often fails. Instead, it is important to prioritise building strong relationships among family members. Spending quality time together and fostering connections can complement and strengthen formal structures, such as governance policies.
2. Emphasising Communication, Conflict Resolution, and Cohesion
Family harmony is crucial for enterprise families to truly thrive and succeed across generations. Effective communication and conflict resolution skills are vital in maintaining family cohesion. Strong family ties streamline decision-making and build trust among members, making these skills a top priority for successful families.
3. Custom Solutions Over Off-the-Shelf Approaches
One size doesn't fit all when it comes to governing and professionalising ownership groups. Off-the-shelf solutions may not consider a family's unique characteristics, leading to conflicts and inflexible structures. A comprehensive family wealth and enterprise process allows for tailored solutions that fit the family's values and goals and is crucial for long-term success.
4. Maximising the Process
The process of professionalisation offers opportunities for open and honest conversations within the family. Strengthening cohesion, understanding dynamics, improving communication, and addressing differing views and conflicts should be the focus. Neglecting this process can lead to formal outcomes with limited long-term value.
5. Ownership Competency Development is Non-Negotiable
Professionalised enterprise families ensure that all family members are equipped for their roles within the family and the business. Each member brings unique strengths, and education is key to their success. Neglecting competency development sets family members up for failure.
6. Diverse Competency Portfolios Demand Assessment
Ownership groups must assess competency levels in areas such as business, family dynamics and personal development. Different roles require different knowledge and skill competencies. Identifying gaps and finding ways to improve is crucial.
7. Resources, Advocates, and Strategy
Developing ownership competencies requires a commitment of time, finances, and emotional energy. Allocating funds, securing commitment, and appointing a dedicated advocate within the family or trusted advisor are essential steps. The family and their advisors should develop a competency development strategy for ongoing development of family members starting from an early age.
In conclusion, professionalising family business ownership is not a luxury; it's a necessity for long-term success. By prioritising relationships, communication, custom solutions, and competency development, families can ensure the longevity and functionality of both their ownership group and the business. It's never too early or too late to start this essential journey towards professionalisation.
Any family who intends to perpetuate their family business or wants to keep that as an option should professionalize their ownership. You can never start too soon. - Keyt
By: John McDonald Chartered MCSI
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