Family business
A family business is any private business that aims to continue beyond the founding generation and remain within the family (through blood or marriage ties).
A family business can also be defined as a business that cares about preserving a family atmosphere and has a "family" organizational culture with exceptionally high loyalty to employees. In such a business, one of the clearest signs is a low or almost zero dismissal rate.
The challenges facing a family business
A family owned business faces unique challenges on the one hand and unique strengths on the other.
While other companies may measure success in quarters, a family business measures success in generations. Other businesses may focus solely on the bottom line, while a family business is also expected to focus on values, including preserving the company for the next generation and perhaps also leaving a mark on the world. Remember that many of the world's large companies started out as family companies, and some have remained so: Strauss, Samsung, Porsche, Walmart.
Family dynamics and non business considerations can disrupt even the most profitable enterprise, especially when the business goes through events such as a generational transition or an external economic crisis.
We know that the most successful family companies are those with a good balance between:
- Professional management
- Business ownership and responsibility
- Healthy family dynamics
Family companies are usually characterized by unique knowledge and strong motivation that drive them to grow and to secure the long term success of their businesses.
However, only 12% of family companies reach the third generation, and only 3% survive to the fourth generation and beyond.
Family companies often lack succession planning and planning of the company's management continuity, and lack ways of dealing with globalization, technological progress and innovation.
These gaps stem from the lack of strategic planning.
Some companies do this, and do it well. But in our experience, a much higher share are immersed in day to day work and long term planning is neglected. Family companies may lack the skills to develop such a plan, and some believe that long term planning means the medium term will somehow take care of the distant future... or that the next generation will handle it. The challenge is implementing a strategic plan that links where the family business is now with its future and leads it to be a successful, sustainable business in the long term.
What does a strategic plan include?
1. Diagnosing the current situation and mapping the company's gaps in professional and management capabilities
2. Building a plan for financial strength
3. Building a growth plan for products and services, including innovation of existing products
4. Defining roles for the next generation and a plan for generational transition
5. Entering or improving positions in digital media
6. Preserving the company's values
How do you know whether a family business needs business consulting?
To know whether you need consulting that will accompany your growth and expansion plans and help you deal with existing and future crises, ask yourself the following questions:
1. Can my business continue to support the next generation easily?
2. Do I feel that the business is losing the character I envisioned when I built it?
3. Are there quite a few conflicts between the business's different managers, family and employees?
4. Do I feel there is a gap between my aspiration to grow the business and the ability to realize that growth?
5. Is there an external threat to the business: competition, regulation, market changes, changes in consumption?
If you answered yes to any of the questions, we would be glad to offer you an introductory meeting to examine possible cooperation that will help you turn the vision into reality.
Consulting for a family business
Examples of family businesses we have supported:
- A real estate company: supporting the owner in building a management team and recruiting an external CEO for the company.
- An agriculture company: managing organizational change related to a change of the company's owners. Implementing a new organizational structure and new work procedures.
- An alternative energy company: supporting the company's CEO, building a vision, values and a work plan. Building a training program, including for the company's salespeople.
- An education company: supporting the owners and the team of employees, building the business strategy and the vision of the business, and supporting ongoing management processes.
