THE FIVE INSIGHTS OF LONG-LASTING SUCCESSFUL FAMILIES IN BUSINESS
Updated: Apr 28, 2021
How do family-owned or family-controlled companies like Walmart, Volkswagen, Berkshire Hathaway, Ford Motor Company, BMW, Roche, Koch Industries, including Richemont, majority shareholders being the Rupert family, and others endure generation after generation?
How do they become “long-lasting, successful enterprises – businesses that are at least three generations old and that continue to be strong businesses supported by strong families?
The world’s most successful and enduring companies hold in common overarching principles. If a business-owning family is particularly perceptive and fortunate, it will recognize the wisdom of these principles early in the life of its business and will continue to honour them throughout succeeding generations.
Other business-owning families may come to such wisdom at a later stage, and while they may wish they had recognized the value of The Five Insights, they appreciate that these principles will stand their business and their families in good stead in the years to come.
The Five Insights which are the major keys to the enduring success of family businesses include:
1. We Respect the Challenge
Successful business have tremendous respect from the challenge of combining family with business. They understand that the odds of passing on a business to the next generation are not in their favour. As a result of this knowledge, they take the task of managing succession very seriously and they put enormous effort into it. In no way do successful business families let the challenge intimidate them, but they are inherently optimistic to beat the odds.
2. Family Business Issues are Common and Predictable
Long-lasting, successful family businesses understand two fundamental certainties: First, they recognise that nearly all family businesses share most of the same problems and issues. Second, they realize that while most issues they face are common to all family businesses, they also understand that different people within the same family system – that is, a family and its business – will see the same issues in predictably different ways.
3. Communication is Indispensable
Business families with a long history of success are families that work very hard at communication. Some once-successful family companies that lost their ability to continue as family firms lay claim that to a lack of sufficient communication. Good communication, means that information, thought, and feelings are not only conveyed but also receive and understood. It means revealing oneself and being open to others. It requires trust, vulnerability, and the willingness to raise issues that might lead to disagreement and conflict.
4. Planning is Essential to Continuity
Planning in a family business is more complex than planning in any other kind of business. Nevertheless, the most successful business families tackle it willingly and intelligently. They know it is essential to their continued success. A business owning family has to plan on four different levels simultaneously and interdependently, including; Business Strategy Plan, Leadership and Ownership Succession Plan for the business, Personal Financial Plan for the family members, and Family Continuity Plan.
5. Commitment is Required of Us
The fifth key to multi-generational business success is commitment – the commitment to the family’s purpose, commitment to planning for the future of the family, commitment to the valuable work that takes place in family meetings, and commitment to the business and its continuity within the family. Families that see a rationale for continuing a business into the next generation are the ones most likely to be successful at passing the business on.
“The most critical issues facing business-owning families are family-based issues more than they are business-based issues. Furthermore, the key issues facing a business-owning family differ depending on where the business is in time or in evolution.” John L. Ward – Perpetuating the Family Business
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