Who Needs Family Business Consultants And Why?
According to the results of a recent survey, most family-owned companies need family business consultants, primarily because of “succession planning” or actually the lack of it.
And because the vast percentage of all companies, up and down every street in every town are considered “family owned”, it means that the majority of all companies face the distinct likelihood of losing their life’s work because they have not kept their eye on the ball when it comes to succession planning.
That’s right – succession planning is critical because it is a process that unlocks cash from the business for the departing generation of owners and creates an environment where the next generation can begin taking over.
This process requires a different set of advisors – or at least a new member or two of the company’s advisory team. One of the many things that a good family business consulting team can do is help with those very important plans – creating business management transition and ownership transition simultaneously. The success of the company for future generations depends upon it.
In companies large and small, succession planning involves aligning the visions of – in most cases the founders of the business although it could be the children or even grandchildren of the founders, stakeholders and gradually handing off decision-making authority to the next generation of managers.
In order to do this successfully, training and identifying potential leaders is necessary. That’s just one of the areas that family business consultants can help with.
It is far too easy to let personal opinions about children, grandchildren or other family members get in the way of choosing someone that actually has potential.
Often we see our children as we saw them when they were kids, leaving their roller skates in the driveway, forgetting to lock the car at the Mall, or leaving the forklift out of gear on the loading dock. A neutral family business consulting team can look at factors that people on the “inside” may not be able to see.
100% of the businesses in the survey said that the continued involvement of family members in managing the company was important. After all, the owners of family businesses often have virtually all of their assets tied up directly or indirectly in the business – so they want folks who are committed stewards of their years of hard work.
Even so, 61% said that they had spent little time on succession planning, possibly confusing succession planning with estate planing, something everyone seems to put off too long. Even CEOs that planned to retire within the next seven years were unsure about “who” would take over after they retired, maybe because the only person they see when they look at their potential successors are the people they were and not the people they have become. Six months or even a year is not sufficient time for making a successful transition. Even ten years may not be long enough.
The survey indicated that there are other areas in which a family business consulting team could help, as well. For example, 13% of owners surveyed said that high profits were not important – remember the higher the “profits” the higher their taxes become. With that ages old mindset business owners often take unwise shortcuts of all kind instead of seeking advice that can help then maximize their profits and minimize their taxes simultaneously.
Family business consultants can help those members who see making a profit as being less than savvy, greedy or undesirable in some way. Making a profit is what any business-leader should focus on.
When the economy is doing poorly, the idea of hiring a family business consulting team may seem unaffordable. Or they choose the less desirable candidates thinking they can get them on the cheap, maybe because there aren’t as many consulting engagements around as there are when the economy is booming.
In fact it is during recessionary times that the help of the most desirable candidates is most valuable – because they are committed to the long term success of their client’s business and not solely motivated by the paycheck today. Again, it’s about being neutral.
None of the owners surveyed said that they expected to fire or lay anyone off over the next year. Why would they say that they might fire someone – especially since they are undoubtedly related to them? Yet, there are probably a number of employees in those companies that should, in fact, be replaced or, at the least, counseled concerning productivity.
The business owners know they are not just firing their lazy nephew – they are firing their families too. In family owned companies nothing and no one is neutral and in a vacuum, everyone is connected to everyone else, so it’s easier and a lot less painful to give that nephew less responsibility and hope he won’t cause too much damage than it is to face your brother over the dinner table.
Seeing the big picture is often difficult when you are on the inside, that’s where family business consultants can help, if you’ll let them. They can call for changes you feel compelled to make, because you are smart and you hired them because they are smart. If you are both smart then the decisions made must be followed even if they are painful.
There are many challenges that family business consultants can help owners overcome. It’s easy to put things off until it’s just too late to make a difference.
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“Ed” the 840 pound Pig appears on the NBC Tonight Show with legend Johnny Carson. This took place after Ron Lieske sent in information and numerous photos showing how big and tame pigs could be. “Ed” was named after Johnny’s sidekick, Ed McMahon. A special pen was made to Ron’s specs complete with rollers to enable the pig to be easily moved backstage at the NBC studio. Also appearing that night was Crystal Gayle who was early in her career.
http://www.shamrockgrowth.com Consultant Neil Gillespie Talks about Family Business Growth Strategy including family values, strategy, succession planning, estate planning, executive leadership in the family business
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David Karofsky, President of Transition Consulting Group discusses the challenges of working in a family business.