Investorideas.com  big ideas for global investors Search www.investorideas.com
   Members       Sign-up       Newsfeeds        Companies        Stock Directories       Research       Video       Funding   




5 Strategies to Ensure Family Business Success

Advisor Shares Tips for Avoiding Common Problems

October 8, 2014 (www.investorideas.com newswire) Non-family businesses can learn a lot from family businesses, says Henry Hutcheson, a certified Family Business Advisor and founder of Family Business USA consultancy.

"Family businesses outperformed non-family businesses during the boom years leading up to the 2008 recession, and during the 2001 and 2008 recession years," he says, citing a recent Harvard Business Review study.

Hutcheson, author of the new book, "Dirty Little Secrets of Family Business," says family businesses were less likely to lay off workers during the lean times, and more likely to maintain their emphasis on socially responsible programs.

But that's just the businesses that survived.

"Many closed their doors," he notes.

With 25 years of business management and family business consulting experience, Hutcheson says he's seen the patterns that can lead to major problems. And they're almost always preventable.

"The factor that enables family businesses to rise to the top is trust: Family members can potentially trust one another far more than non-family members," he says. "But trust can erode when a family member can't or won't perform at the necessary level; when there's a sense of entitlement; drug abuse; laziness. And that can have serious, business-killing consequences.

"If the business is professionalized, there will be a way to deal with those issues. But too often, safeguards are not in place."

Hutcheson offers five top success strategies for family businesses:

  • Keep the lines of communication open. Schedule regular family meetings to discuss issues of concern and topics such as business transition, business performance, and responsibilities. Include all of the family members, no matter where in the hierarchy their jobs fall exclusion creates animosity. Create a family manual that lays out the ground rules for how the meetings will take place to ensure everyone gets a chance to be heard and impediments to communication are left at the door.
  • Assign clear roles and responsibilities. As a family member, it's natural to feel that everything is "my" business. However, not everything is every family member's responsibility. Job definitions prevent everyone from jumping in to tackle the same problem, and help ensure the business runs smoothly.
  • Keep good financial data. The downfall of many small businesses and family businesses is not having solid data. Have a single point of contact to manage the finances. If you're small enough, you can rely on a family member. Otherwise, you'll need to bring in a qualified accountant. You may cringe at the cost for this, but the difference between a good accountant and a bad one is the difference between knowing exactly where you are on the road and trying to drive with a mud-covered windshield.
  • Avoid overpaying family members. Market-based compensation is fundamental and essential. Parents in family businesses tend to overpay the next generation, or pay everyone equally despite differing levels of responsibility. Both are bad practices. The longer unfair compensation practices continue, the messier it will be to clean up when it blows up.
  • Don't hire relatives if they're unqualified. Competence is key. Family businesses are a conundrum: The family aspect generates unqualified love, while the business side cares about profits. Thus, family members will be hired to provide them with a job, even though they're not qualified. The remedy is to get them trained, move them to a role that matches their skills, or have them leave.

"More than 70 percent of all businesses are family businesses they account for a significant number of new jobs and a large portion of the GDP," Hutcheson says. "But that's not the only reason they're so important.

"They're motivated by profits, but also by other important considerations: pride in the family name, building something for future generations, philanthropy. For those reasons, they contribute in tremendous ways to social stability. They make our communities better."

About Henry Hutcheson

Henry Hutcheson is president of Family Business USA and specializes in helping family and privately held businesses successfully manage transition, maintain harmony, and improve operations. His newest book is "Dirty Little Secrets of Family Business: How to Successfully Navigate Family Business Conflict and Transition," (http://dirtylittlesecretsoffamilybusiness.com); he's also quoted in "Kids, Wealth, and Consequences" and "Sink or Swim: How Lessons from the Titanic Can Save Your Family Business." Hutcheson grew up working for his family's business, Olan Mills Portrait Studios. He studied psychology and has an MBA from Columbia Business School, and is a popular speaker at professional, university and corporate-sponsored events.

Ginny Grimsley
National Print Campaign Manager
News and Experts
3748 Turman Loop #101
Wesley Chapel, FL 33544
Tel: 727-443-7115, Extension 207
Twitter: @PrintcessGinny
www.newsandexperts.com

More Info:

Investorideas.com Newswire

This news is published on the Investorideas.com Newswire - a global digital news source for investors and business leaders


Disclaimer/Disclosure: Investorideas.com is a digital publisher of third party sourced news, articles and equity research as well as creates original content, including video, interviews and articles. Original content created by investorideas is protected by copyright laws other than syndication rights. Our site does not make recommendations for purchases or sale of stocks, services or products. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All investment involves risk and possible loss of investment. This site is currently compensated for news publication and distribution, social media and marketing, content creation and more. Contact each company directly regarding content and press release questions. Disclosure is posted for each compensated news release, content published /created if required but otherwise the news was not compensated for and was published for the sole interest of our readers and followers. More disclaimer info: https://www.investorideas.com/About/Disclaimer.asp Learn more about publishing your news release on the Investorideas.com newswire https://www.investorideas.com/News-Upload/

Additional info regarding BC Residents and global Investors: Effective September 15 2008 - all BC investors should review all OTC and Pink sheet listed companies for adherence in new disclosure filings and filing appropriate documents with Sedar. Read for more info: https://www.bcsc.bc.ca/release.aspx?id=6894. Global investors must adhere to regulations of each country.

Please read Investorideas.com privacy policy: https://www.investorideas.com/About/Private_Policy.asp




Join Investor Ideas Members to access the Renewable Energy stocks directory, water stocks, biotech stocks, defense stocks directories and the Insiders Corner

TOP

Investor Ideas © 2000 - 2015 InvestorIdeas.com®, ECON

 

login | logout | about us | contact | disclaimer / disclosure |
partners / links | job search | privacy policy |
advertise | trade | sitemap |