The 9 Secrets of Success for Family Businesses

Published: Oct 31, 2019
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The Circle of Success! Join Lisë Stewart, Principal in Charge of the Center for Family Business Excellence as she describes the NINE secrets of success for family businesses.

Transcript

Lisë Stewart: Hello, I'm Lisë Stewart from EisnerAmper and we're so excited about our recent summit series. I hope you could join us. We learned a lot and one of the things that we learned is that many of our privately held businesses are just facing a wide range of challenges, the never ending changes in technology, the cybersecurity threats, the impacts with tariffs, the changing weather and divided nation, political upheaval, relentless passing of time. In fact, it’s sometimes forcing our baby boomers to say, I've had enough. I need to get out of this business. We want you to know you're really not alone. To help you with these challenges, we're very pleased to offer our summit series every year. It's a chance for you to learn new information, meet new people, and perhaps find some of the answers to the challenges that you're facing today. This year we really emphasize the steps that many of our family owned and closely held businesses need to take in order to be able to protect their business, protect their families, and protect their wealth.

I want to share some of the things that we learned step-by-step, so perhaps you can take some of these ideas away. First, we learned that it's really important to start early. In fact, it's never too early to start. Whether you're at the very beginning of your business development or perhaps you're at a stage where you're thinking about your own transition out of the business at some point. It's so important to sit down and think about your strategy and your future and to put those ideas in writing. You need to be able to share the strategy, our ideas, our thoughts about our future transition, what we want to have happen with our business, with other people. Those people may be our family members. They may be our fellow employees and they may be outside professionals. Start thinking about that future. Take the time to write it down and then take the time to share it with other people.

We also know that it's important to understand that culture matters. Many of our speakers this year talked about the importance of organizational culture, making sure that you have people around you who share your philosophy, who understand what you want to have happen with the business and who are able to support you with your idea. One of the things that so many of our speakers this year emphasized was the management of risk. They didn't say that you need to be risk averse, but rather be risk aware. Try to make sure that you're surrounding yourself with people who can help you to identify what some of the challenges might be. Some of us need a little bit of practice about gazing out into the future and trying to predict the sorts of things that might impact our business, our ability to make really good decisions.

Some of our speakers talked about the importance of perhaps having a board of some sort, whether it's a fiduciary or advisory board. Others talked about using mentors or coaches in a way that would help them to test their assumptions and ask bigger, broader questions. Trying to understand this very fast pace of change and being able to incorporate these changes into our strategic planning was such an important part of making sure that our businesses were sustainable. Next, think about your professional advisors. Are you surrounding yourself with the sorts of people that you need to make sure that you can make good decisions? Ensuring that your service providers understand what's important to you, what's important to your business and what you want to do in the future is key to ensuring that they can really be helpful. Also, we want to make sure that all of your service providers are working together. Do they know each other? Making sure that they're not working at cross purposes is also important.

Be careful about navel gazing. One of the things that we know often about family owned or closely held businesses is that it's really easy after we've grown the business for many years to become too insular, to really rely on our gut knowledge and our gut instincts. When truly we need to have a bigger, broader, more global perspective. How can you expand the way in which you think about your business? Remember we talked earlier about making sure that you're surrounding yourself with people who can give you good advice. Well, part of that getting good advice is also listening to that good advice and then taking action. Try to make sure that you've got access to professionals who are able to help.

Next, think about those values. We know that in many businesses, one of the things that makes it difficult to pass the business on to the next generation, or even think about the future is the fear that the next generation of leadership, whether there's family or not, is not going to be able to run the business in a way that's in alignment with the values that you've always had. Sometimes that happens because, well, we've never those values into words, so it's important to think about what are the values that are important to you? How do you want those values reflected in your organizational culture and how are you going to see those values come to life as you plan for the transition of your business and then finally realize that you're making an impact in everything you do. People watch you. Your decisions impact your family, they impact your employees, often they impact your community. So thinking about the impact of those decisions and how you want your legacy to carry on once you're gone and have left the business behind will also be an important component to your strategy development.

However, there are some things that are certainly more important than others: family, friends, and sometimes just having a good sense of humor. We all make mistakes. It's a challenge for everyone. And again, we're here to help. We're looking forward to 2020 and we hope you join us. Thank you.