Growing a successful family business is not a walk in the park. Sorry, I didn’t say to scare you. But records of series of failed family-owned businesses are fool-proofs that it takes more than the eyes can see to start, manage and grow a trans-generational business.
If you are considering teaming up with members of your family to start a business, I recommend that you pay rapt attention to this article. Failure to adhere to the instructions I shall be dishing out in this post and you decide to do the reverse, will amount to ending up in a big ditch – ditch in the sense that your business may not pass the first generation, and beyond that, you will have so much to worry about.
The reputation of your family being dragged to mud, the joblessness of the entire household and the pain of starting all over again are some of the very frightening evidence that should make you guide your family business with every sense of commitment and sincerity.
In order to grow a successful family business, everyone would like to use this as a case study, there are 3 things we should be looking at…
Step 1: Everyone Involved Must Have a Unique Skill
One of the A-list advantages of running a family business is the arrays of skills that are available. Some of these skills could be natural or acquired.
When all members of the family involved in the business have one unique skill or the other, it becomes easier for them to complement each other without getting a stranger into the most delicate part of their business decisions.
Complementing each other with their respective business-related skills simply means that they will save cost, tap from their various networks and relationships and will also not be caught in the trap of making hasty decisions.
Step 2: Draft Your Scaling Plan
Don’t invest a huge amount of money (for example, your life savings) into a business until you have tested the viability and the result proved that it’s now time to scale it. Of course, before then, you must have drafted your scaling plan.
Inasmuch as the family is not expected to reinvest every single penny made back to the family business, (because they ought to pay salaries too) everyone must be financially disciplined for the business to thrive.
Being financially disciplined simply means, no member of the family is permitted to spend a cent of the commonwealth except on a general approval.
In your scaling, otherwise known as a growth plan, it must be clearly stated the percentage of the profit generated that will be reinvested back into the family business and the most appropriate time to do that.
Based on your family choice, you may choose to scale your skills (by learning new skills), expectations, investing or reinvesting.
Step 3: Continuously Update Your Family on the Next Generation Business Sense
Your business is not a success until it is capable of surviving in the hands of the next generation. If not for anything else, this should make you ponder if what you are doing currently has the capacity of making it in the next generation. Or will it die, become obsolete long before you are dead gone?
Though family businesses account for about $500 billion of total turnover, a shocking report also gathered by PWC after surveying 2800 family businesses in the U.S. shows that 43% of family businesses don’t have a succession plan in place.
What does these statistics tell you?
Simple. So many family businesses will die with the founders.
It will be large because they failed at updating themselves on the next generation business sense.
In this phase of 4th industrial revolution we are in, any company that doesn’t embrace the opportunities technology offers might wake up to discover that they have lost to their competition.
The next generation business sense I wish to communicate to every family-owned businesses is the internet-driven economies. More and more things that required heavy data in the past will be compressed further, more transactions will be carried across the internet and family businesses that don’t upgrade fast will be left behind.
Like I’d said when I started, running a successful family business is never a walk in the park… For you to see the tremendous result, you must roll up your sleeves and get to work. Every member of the family must contribute their quota in order for them to achieve a result.
Though I didn’t mention it in the course of this teaching the fact is, if you don’t separate family matters and misunderstanding from the business, you will ruin your family business faster than a speed train.
As though the longevity of your family business depends on it, of which it does, everyone involved in the business no matter their age, qualification, position or the capacity of their network must be carried along in the scheme of things. Don’t segregate or play favouritism, or else, your family business will die right before your eyes.
That’s all for now.
Over to you… Do you know of any successful family business in their second or third generation? Please share with us in the comment section.
About the Author
Emenike Emmanuel is a freelance business writer, a social media strategist and a business blogger. He’s an author and the CEO of Entrepreneur Business Blog and Aba is Good Online Magazine. You can connect with on Twitter and Instagram with this handle, @emenikeng