What makes family firms succeed where others fail? Here we take a look at what the family business community think is important and increase their chances of success too. At Family Business United we are fortunate to be able to get ‘up close and personal to people working in their own family businesses and over a period of time this has afforded us with opportunities to really understand and appreciate their concerns and challenges.
Summarising the thoughts of family business owners across the UK it is evident that there are essentially ten things that need to be addressed and considered on a regular basis, something that successful family firms do regularly, be it formally or informally.
Areas that all family firms need to be mindful of include:
1. History does not guarantee a future.
Family firms across the UK are not prepared to rest on their laurels and clearly understand the need to be profitable and successful in business first and foremost. Time and time again the message was clear, history and heritage are important and the fact that there is a family story builds loyalty and trust, especially when supplying products and services, but it does not guarantee a future.
Successful family businesses, like other successful firms, understand the need to focus on margin, profitability and good service above all else. In addition, family businesses are prepared to evolve over time and recognise that to continue as a sustainable business for the future they need to remain current and relevant too.
2. Recognising the need to embrace change.
Family businesses recognise the need to change, not for changes sake, but taking into account new technology, changing tastes and fashions and the needs of their customers.
3. Family firms invest for the future.
Family firms do not shy away from the need for investment, be it in new machinery, new premises, new systems or new business opportunities. We have seen some incredible new developments in family firms that are looking ahead, planning for the long term with business plans taking them further forward, ideally for generations to come.
4. Communication is key.
Not just from a family perspective but to ensure that all stakeholders are aware of their responsibilities in driving the business forward. Examples included annual events, monthly meetings and extended family gatherings to include the younger generations who were being introduced to the family firm.
Communication is essential to minimise misunderstandings and to share values and visions for the future to ensure that there is a collective buy-in to where the business is going too.
5. No room for complacency.
Focus on the future, build a better business but be aware of what the competition is up to is again a key insight from the UK family business community. The focus on the business also appears to be stronger and more important for those businesses that had been around for longer, with the current generations feeling the need to continue to grow and build a business, and not be held responsible for things coming to an end.
6. Business comes first.
Obviously family is important in the context of family business but it is readily apparent that business comes first. Without a successful business there is no family business and as such there is a strong mandate for business first and foremost.
7. Social media is here to stay.
There may have been some resistance amongst the older generation to the field of social media, especially in cases where it is the family name above the door, but there is widespread recognition that social media is here to stay, needs to be embraced and has to form an integral part of the family business marketing and communications strategy.
8. Continuing education for stakeholders.
Clearly, the interaction of the family with the business is important but there is also a realisation that the wider family, those not currently involved directly, shareholders and the younger generations need to be educated, informed and kept up to date. Various methods of governance are being embraced to make this happen and it is reassuring to hear how the processes that are being adopted vary from firm to firm, recognising the uniqueness of each family and each business too.
9. Honesty is the best policy.
We hear lots of stories as to how various family firms have evolved over time and again it is clear that some have experienced tough times but it was then that the family pulled together, the staff loyalty shone through and the key to success was honesty – with staff, stakeholders and the family themselves.
Family firms are not immune to difficult periods in their journey but have a resilience that is palpable when the ‘chips are down’ and have an incredible response mechanism to focus on what needs to be done in order to make it through.
10. Staff loyalty is incredible.
Time and time again family firms discuss their employees with many having been with them since leaving school. Numerous firms recounted stories of numerous generations of families working for them and in all it is clear that they consider their workforce to be an extension of their family, part of their very essence as a family business and a powerful differentiator from their non-family counterparts.
Family firms are the underlying engine room of the UK economy and the backbone of communities the length and breadth of the country and those that embrace the need to change, for the right reasons, and are continually striving to improve and evolve to meet the needs of their customers are best placed to survive for generations to come too.