Much of the work we do at the Alliance centers on strategy.
After all, to quote the Cheshire Cat from Alice in Wonderland:
“If you don’t know where you’re going, any road will take you there.”
Choosing where you’re going and which road to take is all about strategy.
There are many facets to strategy, today I’m going to share the Family Business Priority Triad.
There are 3 main priorities that family business leaders can focus their strategy on:
- Growth: Do we want to increase in size, revenue, profitability, market share or other metric of success?
- Control: Do we bring in outside shareholders or leadership talent?
- Liquidity: Do we want to take money out of the business?
It’s not uncommon for business owners to make sacrifices in one of these areas to prioritize the others.
Let’s take a closer look at how this works.
Growth + Control
Business owner A may choose to invest in growth while retaining control of the business.
This means that they wouldn’t bring in any outside investors, even if the potential for growth is huge, because they don’t want to give up control.
Instead, they are willing to reinvest profits back into the business instead of taking out distributions.
Liquidity + Control
On the other hand, business owner B might prioritize liquidity and control over growth.
They would rather maintain control of the business and maximize distributions to themselves, even if this means limiting growth potential.
They might not be willing to invest significantly back into the business.
Growth + Liquidity
Lastly, business owner C might prioritize growth and liquidity, even if it means giving up some control.
They are open to bringing in outside investors and making significant investments back into the business to meet growth targets.
What are the strategic priorities in your business?
More importantly – are those the priorities you chose – or did it just turn out that way?
Many of our clients run strategies designed to balance all 3 priorities.
If you’d like some experienced help developing a strategy for your business, you can book a complimentary and confidential call with one of our advisors here: Book a Call