9 Keys to a Sustainable and Prosperous Family Business
What does it mean to have a Prosperous Family Business?
For many, the term “prosperity” has a simple definition that centers solely on financial success.
And while we believe that’s certainly part of the prosperity mix, we’ve found that for many family business owners, a prosperous family business means a lot more.
It often means financial freedom, but also leaving a legacy of excellence, making a positive impact on one’s community, employees who are personally and professionally invested in the business and more.
At Ferguson Alliance, we are passionate about family businesses because we come from family businesses.
Our family business consulting experience comprises decades working in, leading and advising family businesses. In fact, our advisors have been family members in family businesses, non-family-members in family businesses, shareholders, board members and executives.
We’ve offered business consulting in Houston for more than a decade – and we’re committed to putting our extensive experience toward helping your family business carve a road to prosperity.
9 Steps to Achieve Sustainability in Your Family Business
As family business consultants, we believe that sustainable prosperity stems from three key pillars, each of which is composed of three building blocks – the result is nine key steps that can help your family business reach a level of prosperity that can be maintained for generations. Here they are:
Pillar One: Shared Vision
One of the most important things you can do to ensure your organization’s success is make sure everyone is traveling in the same direction. If you can unite your family and the rest of your team behind a united vision and sense of purpose, nothing can stop your momentum.
Key Element One: Decide
A strong and long-lasting family business doesn’t happen by accident. It takes intentional decision-making to navigate the inevitable challenges of the marketplace. One of the foundational decisions you need to make is what kind of business, and family, you’ll be – are you a business-first family or a family-first business? The difference is subtle, but important.
Family-first businesses lead with the best interests of family members. This type of business, for example, may have a rule that only family members advance to leadership positions. Business-first families, on the other hand, make decisions based on the best interests of the business. This approach leans heavily into practices like choosing qualified successors, regardless of family membership, paying market rate salaries, and establishing clear processes and procedures.
Key Element Two: Impact
The second building block of a shared vision is impact – in other words, what difference will your business make in the world? It’s essential that everyone on your team understand your organization’s purpose, vision and mission. And involving your team members in defining these three areas is a powerful way to gain their buy-in and ensure that your organization’s stated goals diffuse throughout your team. While purpose, vision and mission planning may begin with your leadership team, it can’t stop there. Getting feedback from all of your employees guarantees that you have an accurate and diverse perspective about how your business can shape the world.
Key Element Three: Align
The final element of vision is alignment – and this gets more difficult the larger your business grows. In order to maintain the clarity of vision you worked so hard to reach, you must put into place healthy alignment practices. At Ferguson Alliance, we’ve developed what we call the Alignment Triangle to help drive this exercise.
At the top of the Alignment Triangle are your purpose, vision and values, which rarely ever change. These are followed by your organization’s mission, strategic intents and goals, which should be revisited every three to five years to ensure they remain accurate. At the base of the triangle are your key result areas, budget and operating plans – these change from year to year and are informed by the more permanent sections of the triangle. In a well-aligned organization, everyone is clear on how their day-to-day work, represented by the bottom of the triangle, supports overall purpose, vision and values – plus everything in between.
Pillar Two: Organizational Strength
An organization’s strength is built from the inside out, which means it depends on the people you choose for your team. Strong businesses fully embrace this principle, and they are intentional about how they cultivate and reward talent.
Key Element Four: Leadership
Good leadership is everything. Effective leaders have the ability to paint a picture of an ideal future and consistently remind everyone of that North Star.
Investing in capable, visionary and committed leadership is a must for your organization’s long-term health.
Key Element Five: Talent
Beyond your leadership level, every member of your team is an incredible asset – it’s imperative to have a solid plan for attracting and retaining hardworking, talented team members who share your vision and put their efforts behind it.
A sound talent management strategy will include approaches to recruitment, performance management, learning and development, and a clear compensation philosophy that rewards performance.
Key Element Six: Trust
Without trust, your team will never function at its highest level. A collection of high-performing individuals still isn’t a team. A team shares the same vision, and its members know they can count on each other.
As family business advisors, we believe in the symbiotic relationship between trust and accountability – putting the right people and processes in place to increase accountability creates an environment in which team members feel free to trust and leaders feel free to delegate.
Pillar Three: System for Managing
The final pillar of our family business consulting approach is a suitable management system – one that captures operational details and provides a road map for meeting strategic goals.
Key Element Seven: Strategy
If your organization’s vision is what it wants to “be,” and its mission is what it must “have” in order to achieve that vision, then strategy is what the business must “do” to get there. Strategic planning is an ongoing process for ensuring that your team’s daily work actually makes progress toward your vision.
Good strategic planning and management helps your team make decisions about what actions to take – and perhaps more importantly, what actions to avoid.
Key Element Eight: Planning
Developing a business plan provides clarity around specific steps your team should take. It outlines resources and funding needs, establishes a timeline for goals, predicts and plans for market risk and internal weaknesses, and helps leaders make sound decisions.
In our experience, successful family businesses develop four distinct types of plans: strategic, financial, operational and succession.
Key Element Nine: Governance
Corporate governance is the system of rules, practices and processes used to direct and manage a company. Ultimate governance typically stems from a board of directors, who are hired or appointed by shareholders. Their areas of focus include accountability, transparency, fairness and responsibility.
The type of governance your family business needs will vary according to its size and life cycle stage.
During our years of offering business consulting services, we’ve seen that when organizations implement these key elements in a focused, nimble and methodical way – prosperity is inevitable. We’d love to talk with you about it.
If you’d like to learn more about executing our approach, reach out today to speak with one of our family business advisors.
We’d love to help.
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