12 Signs it’s Time to Hire a Family Business Advisory Firm
Running a family business can present some unique challenges.
Unlike typical enterprises, family businesses are often entangled in a web of personal relationships and emotions.
Given these dynamics, sometimes seeking external guidance and an outside perspective is not just beneficial, but necessary.
Here are 12 signs that it might be time to hire a family business advisory firm:
Succession Struggles
In non-family businesses, leadership succession is simply part of running the business.
But for family businesses, succession becomes emotional and tied to legacy.
When potential heirs are relatives, emotions and expectations can blur objective decision-making.
If you find yourself without a concrete succession plan, no eligible family member willing or ready to take over, or conflicting ideas about who should lead, it’s a glaring sign you need expert assistance.
Persistent Family Feuds
While any business can face internal disagreements, in family businesses, disputes might carry the baggage of years, even decades, of personal history.
Resolving a business disagreement sometimes means navigating a childhood rivalry or an old grudge.
Business disagreements are natural, but if you find they perpetually escalate into personal conflicts, it’s time to get some unbiased professional help to navigate the trick intersection between family and business.
Sometimes our clients are hesitant to call us when this happens, believing that they need to sort out the interpersonal conflicts before addressing the underlying business issues.
One of the things that sets us apart is our focus on FAMILY business, which means that resolving these personal conflicts is a core part of the service we offer.
Directionless Drifting
Family businesses often start with a patriarchal or matriarchal figure’s vision.
As generations change, aligning everyone to a unified strategic vision can become challenging without external clarity.
If you feel like your business is drifting or you’re not sure where you’re heading, or your leadership team has strong differences of opinion about where you should be going, external expertise can help you carve a clear path forward and get everyone rowing in the same direction.
Growth and Expansion Uncertainties
Families often have emotional stakes in original business locations or product lines.
Diversifying or expanding can then become a sentimental decision rather than a purely strategic one.
If you’re unsure about when, where, or how to grow your business, an advisory firm can help pinpoint the right opportunities.
Governance Gaps
Establishing a formal board might be seen as a move away from the familial touch that characterized the business.
It can feel like introducing outsiders into a close-knit family circle, which can be a sensitive matter.
However, a strong and effective board of directors can bring invaluable insights, connections, and expertise to a business, helping it grow and succeed. The presence of a board can also enhance the company’s credibility and improve its prospects for securing financing.
Ferguson Alliance offers advisory and fiduciary board set up, board facilitation, and independent board members.
Balancing Family vs. Business
While all businesses require work-life balance, family businesses face the challenge of work-life-family balance.
Decisions benefiting the business might upset the family, and vice versa.
If you’re struggling to juggle the interests of your family with the demands of your business, know that you are not alone!
Many of our clients report the same struggles. Getting some outside perspective and advice can help you find a harmonious balance.
Up to your eyeballs in problems and you don’t know where to start
If you’re buried under issues and don’t even know where to start addressing them, it’s a strong indicator that external guidance might be necessary.
In family businesses, admitting to feeling overwhelmed can sometimes be seen as letting the family down. This added emotional burden can make it even harder to seek out necessary help.
Our perspective is that that every problem has a solution – and sometimes simply seeking help can lessen the burden almost immediately.
Stagnancy and Lost Passion
Your business may be running well, but you feel like you are in the same routine all the time. The business has lost its WOW factor.
Before you know it 5 years have passed and there hasn’t been a lot going on.
Beyond profits, family businesses carry the weight of tradition.
When passion fades, it’s not just a business at stake but a family legacy, amplifying the emotional strain.
Misaligned Sales and Operations
When inventory management doesn’t meet customer delivery expectations, or there’s consistent miscommunication between these departments, there’s a problem that needs to be addressed.
In a family business, the sales head might be a cousin, and the operations head, a sibling.
Disagreements can quickly become personal, making alignment harder than in impersonal corporate structures. When this happens, it’s time for a third-party perspective.
Sales and Finance Disconnections
If sales teams are offering credit terms without aligning with finance, or there are issues with credit standards and collection procedures, an advisory firm can help bridge that gap.
Of course, financial matters in family businesses are often more than about bottom lines.
They intertwine with family security, personal aspirations, and generational promises, complicating straightforward financial decisions.
Compensation Conflicts
When the incentives for senior and middle management don’t align with short-term tasks or long-term strategic goals, it can lead to misdirected efforts.
In non-family ventures, compensation is a professional decision.
In family enterprises, compensating one relative over another can evoke feelings of favoritism, making objective decision-making trickier. External advice can help realign these incentives.
The Stress Factor
The pressure is twofold. There’s the universal entrepreneurial stress, coupled with the obligation to uphold family pride and legacy.
A downfall is not just a commercial setback but also feels like letting down generations.
If you’re losing sleep over the health of your business, it’s more than just a sign. It’s a clarion call.
Taking a proactive approach by seeking expert assistance can help address underlying issues and set your family business on a path to long-term success.
Every family business is unique, with its distinct challenges and dynamics.
When you engage Ferguson Alliance, you get an advisory firm that offers tailor-made solutions, taking into account both business objectives and family values. If it’s time for you to consider hiring a family business advisory firm, book a call with us – we’d love to help.