What is a wealthy place? It goes beyond money to the heart of abundance – abundance of opportunity, challenge, value…and prosperity. If a family business is not a place of wealth, then something needs to change to stop strangling its abundance. Here are some thought-starters to explore the idea.
Family businesses offer advantages that few other work environments provide. You get to work with people you love. This is not just people you respect – though that is desirable in any workplace. This is working with people you ‘do life with’. You also get to focus on learning how to make the business better, because you grew up with it. Most people launch themselves into their career with little understanding of either their profession or the business they join, and the learning curve is very steep. When you grow up in a business, you understand exactly what the business does and have a fair idea of how as well. You get the opportunity to build on traditions that have come before, with stories that have likely been part of your personal life as much as your professional life for years. And, as one generation succeeds the next, you generally start from a place of respect as a family member – and that’s a huge head start.
The rich tapestry of a family business comes with a range of challenges that are, once again, unique to this environment. They generally lack the independence of a typical business, leading to blinkered perspectives and decisions by people who can be ‘too close’ to the business’ affairs. This can also impact the team’s ability to read the market and discern wider trends and changes. The close nature of interpersonal relationships can create a conspiracy-oriented environment. It can reduce effective accountability – the ‘I won’t call you on that, if you don’t call me on this’ factor. Similarly, they can discourage openness through power plays and control – for instance, who does mum and dad really trust?
So, what makes the difference?
There are a few factors that underpin the difference between the two – and that drive the ultimate goal of creating a place of abundance:
- Vision and values – strong family businesses answer and document the core questions such as ‘what is the family’s legacy?’ and ‘what are the family values the business will defend?’
- Power – to protect against insular thinking, healthy family businesses create mechanisms that ensure every voice is heard
- Position – sustainable family businesses create processes that value contribution based on capacity and merit as opposed to default or assumed roles – and they reassess capability as the family’s story grows
To unlock the difference and empower a wealthy place, family businesses, (like any other business), must document their plans and hold everyone accountable. The saying ‘the fish rots from the head’ comes into play here. A business cannot grow on whims. They must also be places that are committed to telling the truth. Family businesses can more easily forget about professionalism and get personal – or get into a space where non-family members don’t feel free to speak up when they see the wrong thing happening. Telling the truth depends just as much on an honest environment that enables the truth to be shared in the first place. Finally, unlocking wealth commonly comes down to finding an independent guide for the processes of the business – one that can be respected to help hold the family to account.
When family businesses balance these factors, continue to do what works and embrace change along the way, they are positioned to be wealthy places for generations.