The DNA of the family entrepreneur!
10 Characteristics of those running a successful family business.
Over the last few months we have, as a firm, been working closely with a broad cross section of family businesses including some very long established ones and some still relatively young. For this work our definition of a family business has simply been a business that has been owned and managed by more than one generation of the same family and/or a business that has more than one member of the same family sharing ownership and being actively engaged in its day to day operation.
As part of our work and interest in the DNA of a family business we have been looking at what might characterise or determine the success of such enterprises.
It would seem that there are 10 characteristics or aspects that they have in common:
- Family members engaged in the business today have often worked in and for other organisations, often in a variety of roles and often senior roles. This, in part, has helped them bring new work approaches and management techniques to their own family business.
- Where there is more than one family member in the business they have agreed roles based on best fit of skills and experience. The ability to agree roles and responsibilities tends to help remove personal and emotional conflict and often leads to the most appropriate family member undertaking roles for which they are best suited.
- Often there is a non-family member on the Board who provides a dispassionate viewpoint and brings specialist skills to the table. In some cases we have seen Boards made up of nearly all non-family members. Some of the most effective Boards often have a non-family member as the Board Chairman, someone who they all respect but is not influenced or tied up with the family politics.
- They are as passionate today about the business as their forefathers or foremothers. With an often overriding sense of custodianship and respect for previous generations, many 2nd, 3rd and even 8th generation businesses are keen to ensure the business continues and thrives well into the future.
- Whilst more corporate enterprises may focus on optimising financial returns each year or for shorter periods of time, family businesses are often more concerned about sustainability and continuity. For them it is as important to be around for the next generation and the one after that.
- They are innovative and responsive to the market and customer needs, often with high levels of customer service and satisfaction. Many of the businesses we have come across are as innovative today and responsive to change as they were when they were founded, with the pride and passion for what is done very much at the heart of good customer service.
- They are as likely to talk about business at Sunday Lunch as they are football, rugby, politics or soap operas. Whilst the discipline or more structured business and Board meetings may become the norm, it is not untypical for a decision or conversation about the business to be made in a more social family setting. Understandably, it is not easy for business and family to be decoupled, especially where a business is very much a part of the family.
- We are seeing a growing number of next generation or younger family members coming in to the business following a broad education; and often having obtained a degree or similar qualification. We are also seeing a number of family members taking part in an external programme or course around business management etc e.g. the Goldman Sachs1000 or an MBA, even attending Harvard. Equally they are likely to engage with or seek external advice either from professional advisers or through business support programmes.
- Recognising their own strengths and shortfalls in the team, many family businesses often employ people that can do specific jobs or execute a management role better than they can so that they can focus on where they can be more effective and profitable.
- Whether this is a surprise or not, many of those running their own family business could have earned more working for someone else. However the rewards, pride and freedom etc often around running or being a part of a family business are often a greater reward.
Whilst these 10 are not necessarily an exhaustive or definitive list of why family businesses are successful or special, certainly from a business and advisory role they help us to understand aspects of strategic planning and financial reward. We look forward to furthering our understanding of and working with the vast range of family owned businesses across the East of England.
James Pinchbeck, Marketing Partner, Streets Chartered Accountants