While the specific pillars of success for family businesses can vary depending on the industry, size, and individual circumstances, here are 12 key characteristics that are generally associated with the long-term success of family businesses.
Clear Vision and Values: Establish a clear and shared vision for the business, along with a set of values that guide decision-making and behaviour within the family and the company and ensure that they are fully embedded within the culture of the organisation too.
Strong Leadership: Cultivate effective leadership within the family and the business, with a focus on both family and non-family members who possess the necessary skills and expertise to ensure the success of the business going forward.
Effective Governance: Implement governance structures and processes that address issues like succession planning, conflict resolution, and decision-making to ensure the business's long-term viability. Effective governance also needs to take into account the need to provide an appropriate framework to manage the relationship between the family and the business, as well as all of the other stakeholders too.
Succession Planning: Develop a well-thought-out succession plan that identifies and prepares the next generation of leaders, while considering merit-based appointments. Successful family firms start the process as early as possible with open and honest conversations which then need to be implemented appropriately. In many instances the transition from first to second generation is the hardest as it is the first time that a family have been through the process.
Professionalism: Promote professionalism in all aspects of the business, from hiring practices to performance evaluations, to ensure that the best interests of the business are prioritized.
Communication: Establish open and transparent communication channels within the family and the organization to prevent misunderstandings and conflicts. Communication is crucial to success and needs to be clear, open and transparent.
Adaptability: Be adaptable and willing to embrace change, innovation, and new technologies to stay competitive in a dynamic business environment.
Financial Discipline: Practice prudent financial management, including budgeting, financial reporting, and managing debt, to ensure the business's financial stability. It is also important when it comes to finance that the family and business are separated to ensure that the business is financially sustainable and that family members do not become dependent on dividends from the business to fund their own lifestyles which can be to the detriment of the business.
Customer Focus: Prioritise customer satisfaction by consistently delivering value and quality products or services that meet their needs.
Talent Development: Invest in the development and training of employees, including family members, to enhance their skills and capabilities. Family businesses are well known for investing in the development of their people with many employees spending their entire working life with one family firm. Family businesses however should not become complacent as the new generation of employees are keen to grow and fulfil their full potential and may not be as committed to one firm in the same way their predecessors were. Investment and career development is therefore an important tool for family firms when it comes to recruitment, retention and motivation of staff.
Community Engagement: Engage with and contribute to the local community, fostering goodwill and building a positive reputation.
Long-Term Thinking: Maintain a long-term perspective, with an emphasis on sustainability, rather than short-term gains, to ensure the business's longevity.
These pillars are interconnected and serve as a foundation for the success of family businesses. They help address the unique challenges and opportunities that arise when personal and professional interests overlap within a family-owned business and successful family businesses adapt and evolve with these underlying principles helping to drive decision making.
Obviously, these pillars are not prescriptive and times change, not forgetting that each family has different traits and ambitions, but clearly documented, communicated and followed pillars like those above stand family firms in good stead to achieve their goals and remain in business for years to come.