“The most important thing in communication is hearing what isn’t said.” - Peter Drucker
Family businesses are the backbone of the economy. They are dynamic and entrepreneurial, and most of them expect to grow – indeed, some of them have become very large organisations. To succeed, the family business must attend to the needs and the roles of the family members involved, those members that are outside of the business, and the employees of the business who do not belong to the family. The problems family firms face in attempting to combine business with family politics is unique and often explosive, and can prevent them from achieving full potential. One of the main barriers to their longevity and growth is a lack of advice when they encounter teething troubles, sibling rivalries or a succession problem. It is important to understand the specific needs of this sector. One way to deal with these issues is to appoint a non-executive director or a strategic business advisor.
Family firms face the same economic issues as all businesses, including market and technological changes, shifting customer tastes, tougher competition and political instability. However their financial capability is often more limited and, in addition, they have less management depth to cope with these pressures. The difficulties inherent in balancing the goals and the needs of the family with those of the business have a further impact on the company and its ability to perform in the marketplace. Problems faced by family businesses should be addressed by developing mechanisms that allow the family to learn to make good business decisions while maintaining family harmony. There needs to be a disciplined and structured approach, centred on open communication and understanding the needs of the business.
One of the key ways to deal with issues of a family business so as to avoid insulation from the outside is to establish a well-constructed board. The addition of a non-executive director can introduce facets such as management experience, strategic perspective, broader business insight, commercial and financial insight and objectivity.
Finally in order to provide for retirement, the family‘s wealth should be managed to provide financial security for the owner manager, his spouse, and dependants. Accordingly, the family should build wealth outside the company to develop an asset base which is not reliant on the fortunes of the business.