30th March 2015
Keeping it in the family
Although a huge 70% of businesses are family owned within the UK, shockingly only a small percentage (around 13%) survive beyond the third generation. Often this can be due to the drive and passion found in the first and second generations being surpassed by family loyalty and inheritance by third generations. It could also be due to relying on tried and tested ways that have worked for previous generations, which don’t necessary work for future generations - normally they don’t! As markets and economies change over generations, businesses have to change with them or just get left behind and ultimately disappear.
Family businesses handed down through generations can often find “change” a massive challenge especially if it is left longer than perhaps it should have been, resulting in a turnaround and restructuring being required to keep the business fresh and modern; something that is expected of all businesses whether family run or not. The ability to adapt and change accordingly is essential, however can be a point of conflict when owners and managers are also relatives of the younger generation of employees.
It is therefore imperative to bring in external professional expertise or an experienced non-executive, to add a fresh dynamic approach. Often it can be hard for families to think outside of the box when loyalties and emotions take over, so an outside input can help change this stimulating positive debate and third party experience.
Turnaround professionals can often quickly uproot where the problems lie and help make the brutal decisions that are often difficult to make with relatives around. Although these solutions and decisions may not always be what a traditional family business wants to hear, it is important to take them on board in order to transform a failing business to a successful one. If they don’t they could lose the family business that has taken generations to develop and build. The biggest challenge is acknowledging change is required and then engaging with the right professionals.
Family businesses handed down through generations can often find “change” a massive challenge especially if it is left longer than perhaps it should have been, resulting in a turnaround and restructuring being required to keep the business fresh and modern; something that is expected of all businesses whether family run or not. The ability to adapt and change accordingly is essential, however can be a point of conflict when owners and managers are also relatives of the younger generation of employees.
It is therefore imperative to bring in external professional expertise or an experienced non-executive, to add a fresh dynamic approach. Often it can be hard for families to think outside of the box when loyalties and emotions take over, so an outside input can help change this stimulating positive debate and third party experience.
Turnaround professionals can often quickly uproot where the problems lie and help make the brutal decisions that are often difficult to make with relatives around. Although these solutions and decisions may not always be what a traditional family business wants to hear, it is important to take them on board in order to transform a failing business to a successful one. If they don’t they could lose the family business that has taken generations to develop and build. The biggest challenge is acknowledging change is required and then engaging with the right professionals.