The Secrets to Family Business Success
In 2014, Ernst & Young (EY) conducted a survey of the worlds largest family businesses. These businesses came from about 2,400 family businesses from the top 21 global markets including the United States. EY concluded that businesses are highly important to their respective global, national and local economies for the reasons you might think. They are tax-paying citizens who steadily employ other citizens and return their wealth to the owners, employees, vendors and the community they live in. In this article, I am summarizing their findings about what makes these family businesses so successful. If you adopt practices such as these, you may see your business in a better position in the future.
87% identify a successor
Succession is a continual, perpetual process that prevents a business from the loss of a key person with unique knowledge and skills. Whether the reason is retirement, accident or ill health, succession planning means your business is prepared, at all times, with more than one capable leader, ready to survive the event that would end other businesses.
70% have a woman in consideration
Having a woman as a leader in your business, after years of male leadership, can lead to a culture change that is a minty fresh breath of air for employees and customers. Of course you should evaluate all potential leaders of your business, male or female, as skills, talents and personalities are also at play. Given that some businesses need a unique perspective, sometimes a woman leader can give that perspective like no other.
90% have a board of directors
Let’s face it. It’s hard to go it alone. Nobody says it should be that way. Having a good, supportive team assembled for your board can mean more decisions more quickly and better decisions more often. Like editing your own writing, business owners often find it hard to critique their own decisions before they make them. A good board, properly assembled from the right experiences can offer a body of knowledge that is highly valuable in directing your company to greater success. It’s good to select family members as they have a vested interest in the business; however, others with strong knowledge of business governance are also strong candidates.
90% have regular family or shareholder meetings to discuss the business
Having regular discussions about the business tends to provide a forum that results in caring for the business and caring for each other. It will also provide a directional compass that allows for prioritizing business issues and resolving the important matters first. Regular meetings will also allow everyone to pull their heads out of the day-to-day operations and think more strategically as a team.
76% include “Family Business” in their branding
Significant research about publicly branded family businesses indicates employees and customers see them as worthy of trusting. Let’s face it, would you trust a family business over a non-family business when deciding between the two? Admit it, the family business has a much warmer tone that indicates they care about each other and that care extends to the customer.
81% help the community in some way
Whether making cash contributions to non-profits, setting aside a day for employees to volunteer in the community or any of the many other ways your business can help, you are setting a tone with your employees and customers that you are committed and care about what’s happening to the people around you in the community. Bolster that with a solidly practiced company code of ethics as well as company values and your community will see your company as different from the competition.
83% plan to increase cyber security spending
Cyber security is becoming a growing issue in any company. Websites can be hijacked, branding can be damaged and sensitive information can be unknowingly stolen by information thieves that have unknown bad intent. Every company should be considering how to protect their brand, their customers, their employees, and any information that may be subject to theft. Because of the cost of performing your own cyber security is high, a good strategy these days is to leverage the cloud offerings provided by the cyber security experts within your information system partners. The cost is a very small fraction of doing cyber security your self, and the protection is much greater.
EY surveyed over 2,400 family businesses world wide and found the following keys to a successful family business:
- 87% Identify a successor
- 70% have a woman in consideration
- 90% have a board of directors
- 90% have regular family or shareholder meetings to discuss the business
- 76% include “Family Business” in their branding
- 81% help the community in some way
- 83% plan to increase cyber security spending
The survey by EY summarized in this article is titled “Staying Power: How Do Family Businesses Create Lasting Success?”
Rodger Stephens, CPA, CGMA
Prize Performance LLC is a consulting firm specializing in accelerating business performance for small to medium sized businesses. Contact Prize Performance LLC today to take your business to new places!