Six Strategies for Family Business

by Leo Pound on November 24, 2014

Strategies for Success Family Business | Pound Consulting | Leo PoundIt is often said that the first generation builds the business, the second generation makes it a success and the third wrecks it.  There have been many iterations of this quote originally penned by American businessman, Andrew Carnegie.  Unfortunately, generations later, it still holds true.  The Family Firm Institute reports that less than one-third of family businesses are able to survive as they cross generations.

There’s nothing earth-shattering here.  You’ve heard all of these strategies before.  But, chances are you have been so busy with day-to-day operations, there are some areas that you have neglected.  So I’m reminding you of these six strategies to consider for your family business success.

  1. Hire the Right People: Know your strengths and weaknesses.  Focus on your strengths and find people to manage parts of the business that you are unfamiliar with.  You wouldn’t hire a marketing expert to be your CFO.  Don’t expect that you or your family members can do it all.  To find the right person, you will often need to look outside of the family.  You can look at this in two ways.  The first is as an opportunity to mentor family members to take over that position when they have gained the necessary experience.  The second is hiring someone that will give the business new perspective from their years of experience elsewhere.  They can often offer advice and guidance without the emotion that a family member might have.
  2. Understand Your Core Business: What is the focus of your business?  Have you recently reviewed and analyzed where your business comes from? Do you know where profit lies and how to improve underperforming areas? I was recently working with a business that had departed from their core business.  It was an expansion meant to grow the business, but in fact, it ended up taking time and focus away from their very successful core business.
  3. Know Your Customers:  When was the last time you spent the day in a delivery truck with your employees “making the rounds”?  Have you ever shadowed a sales person for a day? Do you know your customers by first name?  

    Don’t expect your customers to always be there.  It’s a relationship you need to work to improve and grow.

  4. Evaluate Expenses:  Keep personal and business finances separate. Company credit cards can often be the difference between ending a month in the red or black.
  5. Share Passion, Strategy and Goals:  It’s important for all family members involved in the business to share the same passion, goals and be willing to follow established business plans.  Make sure there is a plan in place to deal with any family discord or disagreement.  The last thing any business needs is family members that do not buy into the program.
  6. Have a Legacy Plan:  I’ve written before about having a legacy plan (sign up for my newsletter to receive this report), this is especially important when running a family business.  Your plan needs to include what happens when you are no longer willing or able to run the business.  Do you have the right people to manage the business?  Will a family member take over for you?  Are they the right person for the job?  Will other family members accept this person as the new leader?  Being handed a family business and all of a sudden being thrown into an executive role can certainly wreck a company. A plan is key to your business success.

Managing a family business can be difficult. I have worked with many families to help develop a plan for success. Do you need help with your family business but have nobody to consult with? Beginning this month I will be offering a new way for us to work together. It’s called Power Hour with Leo. It’s an opportunity for you to speak with me for an hour. In that hour we can discuss your business direction, your strategies for success and more. Whether you are experiencing rapid growth or a downturn, this is a perfect opportunity to gain some clarity and direction in your business without paying my daily consulting rate. Click here to purchase a Power Hour.

What are some challenges that your family business faces?

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Leo Pound

As Pound Consulting Inc.’s founder and principal, Leo Pound is responsible for day-to-day operations, as well as building partnerships, maintaining relationships and providing value to all clients. Born and raised in Philadelphia, Leo has spent most of his career helping companies around the world.  He has worked with many multi-national companies – including ones based or operating in China, Australia, Canada, England, Germany, Japan and more. He has in- depth knowledge of operational and strategic planning, M&A, forecasting and budgeting and cost containment. Leo is a hands-on professional who is sensitive to the pressures and challenges facing a troubled or rapidly growing company and their management team.

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