Top 5 Tips For Family Business Success

 

Running a family business can be a rewarding way to establish a legacy and provide future generations a financially steady career path. However, the dynamics in a family-owned operation can pose their own unique set of challenges. Kennards Hire is a successful, family-owned business that has been operating in Australia for over 60 years and has recently expanded into New Zealand. Showcasing a strong business model and avoiding the pitfalls that have plagued others has allowed Kennards Hire to continue to grow and maintain its position at the top of the local Hire and Rental Industry. Angus Kennard, grandson of founding father Walter, provides his top 5 tips for maintaining a successful family business.

1. Define values

It’s important to sit down with everyone involved, particularly in the early stages, and clearly define the role of the family in the business. Understand what your family values are and that will allow you to put appropriate structures in place on which you can grow the business.

Defining family values is particularly important with the younger generation coming through. It enables them to understand why we’re here, how we got here and where we want to move forward with the business whilst also providing a foundation for the business.

2. Have a succession plan

A good business succession plan is just as important as personal estate planning. It is the key factor in ensuring that the business continues to prosper after you move on. Even in the early days, it’s important to plan for the future as it’s fundamental to the long term success of the business.

3. Communicate openly and honestly

One of the biggest issues is letting family matters get in the way of business. Therefore, it’s important to schedule regular time to strictly talk about business. Don’t get side tracked by personal family matters or little disputes; stay focused on in-depth and strategic business-related discussions.

I’ve always thought it’s important to keep your business life and home life separate to maintain a successful family enterprise. This will ensure you maintain an objective view on the running of the business and leads to a better overall business environment.

It’s also a good idea to get an outside point of view if decision-making gets tricky. This is particularly appropriate when talks about growing the business pop up; a qualified outsider can shine fresh light on outstanding problems whilst also ensuring new ideas aren’t lost in the tangled web of family and relationships. Removing emotion out of the decision-making process will help you come to a decision faster and could potentially keep you out of the court room if things get sour.

4. Family bond

The success of the family business ultimately comes down to the strength of the family unit. A lot of family businesses have failed in the past because the family has failed.

So just as it’s important to schedule time solely on the business, it’s equally important to do the same with family. Organise an annual team-building event and remove yourself from the business environment to focus on building relationships within the family. During this time make sure any overlying issues or feuds are addressed and put to rest, this is very important for the continued success of the business.

5. Document everything

There’s a risk with the family business that normal practices can be overlooked and replaced with verbal agreements and assurances resembling “trust me”. The most costly mistake family businesses make is failing to document in writing what has been agreed upon between family members and business partners. It is imperative for the success of the business that you clearly define the terms of any business relationship in writing, family or not.

This goes without saying but unfortunately people too often forget to put everything in writing and it can be a huge pitfall for the business. You need to treat the family business as you would any other business and that means documenting any form of agreement or deal brokered, whether it’s between family members, business partners or clients.