The Family Formula, part 1

The Family Formula, part 1

Five ways family businesses can flourish: why you need freedom and focus.

by Fiona Unsworth

The Family Formula, part 1

 

​Over the years, we’ve been lucky enough to work with a number of family-owned and family-run businesses. At their best, they have strengths other businesses struggle to match. But you can also have too much of a good thing; those very strengths can be the cause of problems that stop some family businesses being as successful as they deserve to be. So over the next few weeks, we’ll be looking at five of those conundrums, and sharing what we’ve learnt about how to tackle them.

And we’re recording a series of podcasts to accompany them. Listen here.

 

Number one: Why you need freedom and focus 


Family businesses often have much more freedom than their corporate counterparts: no pressure to produce quarterly reports or deliver dividends, and often fewer shareholders and stakeholders to appease. In theory, that’s liberating: it can free you up to think long-term, and gives you the licence to try things out that a more mainstream business might be too slow to execute, or too in thrall to this month’s results to risk.

 

THE PROBLEM: WHEN LIBERTY’S A LIABILITY

The problem is that freedom and chaos are close cousins. If you don’t have a boss to answer to, you’re free to make brave decisions - but also to change your mind. And some family businesses do that a lot. That can make working in one unsettling, and too much chopping and changing also confuses your customers and the outside world.

And while thinking long-term is clearly a good thing, as is being nimble enough to react to the short-term, that can leave a gap. PwC have called it the ‘missing middle’ in family business. Specifically, they often lack a strategic business plan. 


 

THE ANSWER: QUESTIONS, FOCUS, CANDOUR

So if focus and strategy are your Achilles’ heels, you need to find people who can fill the gap. They might already be there, hiding inside your company, or they might be external advisers.

When we’re asked to do that, we do three things. First, we ask the questions no-one else is asking – either because they’re too close to the problem, or because they’re scared to speak up. That can tease out whether our client has the right strategy – or any strategy at all.

Second, we help the business decide what to focus on. We can be objective, ignoring whose pet project is whose. And simply being outside the company helps us see the wood for the trees.

Finally, we can be really honest. Our Principal, Gilmar Wendt, tells the story of one owner-manager we worked with: ‘He’s a classic case. He has loads of ideas, and is good at delegating, which means he’s always giving people jobs to do. But he also changes his mind every three days. And if you’re in his team, it drives you crazy, because you spend time putting your heart and soul into things which he’s already lost interest in. It’s inefficient and wildly demotivating.

‘After one workshop we ran, his team stayed behind, sank a few drinks and pleaded with us to help him focus, and stick to a decision. And as ‘outsiders’, it was much easier for us to challenge him – gently! – than for them. We were their hope.’

That external eye can come from many disciplines: experts in finance, HR, or communication, like us. But it’s the one thing most family businesses need more than anything else.

 

FULL SERIES: FIVE WAYS FAMILY BUSINESSES CAN FLOURISH

Part two: Why growing also means growing up 

Part three: Why old dogs need new tricks (coming soon)

Part four: Why you can’t just keep it in the family (coming soon)



Part five: Why values are so valuable (coming soon)

 

We’d love to help you build your family business. If you think we can help, get in touch here

Further Reading

The Family Formula, part 1 The Family Formula, part 2

The Family Formula, part 2

Five ways family businesses can flourish: why growing also means growing up.

The Family Formula, part 1 The Family Formula Podcast

The Family Formula Podcast

A series of conversations with members of family businesses.