Family business: A choice or a gamble of chance (that too, not for long)

By SOCH Business Mentors LLP Posted January 2, 2022 in Family business

Family business: A choice or a gamble of chance (that too, not for long)

In the last quarter of 2021, we have received nearly 40 new requests. Below are some of those worries by the family businesses across the nation: 

Worry #1:

“My son isn’t interested in carrying our business forward, and I am worried what I should do with my empire and immensely scaled up business”- An esteemed family business since 1987 

Worry #2:

“We are three brothers, and our seven children are all in business. However, it feels like we are all sitting on an invisible time ticking bomb of unresolved conflicts and daily fights – knowing it will blast one day but not knowing where to begin to avoid the same”- A USD 240 million family business since 1976, 4th generation getting ready 

Worry #3:

 “Our five sons studied abroad and have given the business a greater edge than we could ever imagine. How do we keep this growth growing and keep their newly-wed spouses involved positively in the family enterprise including business and philanthropy?” – A family business with above industry average CAGR (by a factor of 2.4x to the next top performer)

Worry #4:

“Our succession plan is not addressing the key financial risk and brand value-based equity roadmap. Should this have not been in our succession plan to make a rightful decision and then transition accordingly?” – A USD 110 million company operating traditionally since 1979 

Worry #5:

“We operate in 5 regions across the world: Six brothers and fourteen family members running a USD 1.2 billion diversified enterprises. We have no succession plan, and we would like to get a business continuity and family constitution in place. We think we are ready to begin this. Can you help?” 

Worry #6:

“How do I address the issue of not having enough talent or skills in my sons for making the business grow exponentially? Our decisions die during discussions, and we remain unhappy and dissatisfied. Is there a smarter, independent and unifying decision-making approach? How do we get decision-making system imbibed in every family member with effective governance?” – A USD 380 million family business since 1983 

Many such concerns and questions are similar to the above – some of them even far more sensitive and critical for the long-term health and success of the family businesses. 

We thank family businesses for their growing trust in us. We remain grateful and glad to be serving them

What does all the above say in a nutshell for the coming times in the current year ahead..? 

The landscape is changing. For family businesses, the opportunity is monumental and unprecedented in every sense. However, the opportunity for gaining is the same as losing, should they opt to do nothing. 

If family businesses decide proactively without further delay to get their own houses in order, it will provide them direly needed winning streak for times ahead. Meaning, they need to decide to get their family enterprise organised, systematised, structured, and unified at head, heart & soul level. 

Family businesses will have a diamond edge when they have their constitution, governance and family office developed and in action aligning with their shared mission and envisioned future. This diamond edge will protect their long-terminterests and help them accomplish their most daunting visions together for long-term prosperity and harmony. 

We already notice huge shifts and positive transformations in families during our process for helping them build the above three core functioning bodies for a successful multi-generational family business, making their listed and unlisted worries (more serious in unspeakable kinds of worries) both resolved. 

So, let me share a practical clarifying tool that we have institutionalised at family businesses with constitution and governance: 

Step 1: 

Establish a worry forum (to listen to each other’s worry with no judgment but pure intentions to understand, empathise and strictly offer no resolution) – an open and honest forum in the family business where all participating generations in the family take a day break discussing all their real worries. We would encourage you to be responsibly selfish, meaning, speak your mind and heart to all other loved ones

Step 2: 

Sort out all worries listed on the first day in groups such as generations holding common worry, the durability of worry, disaster potential of the worry if realised, the super upside of the same worry should it be chosen to address for real long term and many similar categories 

Step 3: 

Once sorted as above, carefully look at each group and list them in priority of attention from red, amber and green traffic light system…. Green are ones to park for now or even ignore, and amber are demanding attention and red ones are unmissable should family business wants to see next generation at all 

Step 4: 

 Pull out your priority matrix from business or enterprise strategy that you may have worked in the last quarter or half-year for this new year and find anomalies and spot synergies from above 

Step 5: 

Apply the same process for all other crucial anchors that are weighing down the business morale or momentum or both due to hidden family worries, guilts, regrets, shame and doubts. All these are powerful identifiers of what choices you must take and not let these below the surface dangerous things brew only to bring family cancer or worst on the surface sooner than we imagine. 

Think if this helps. Create your own problem understanding forums and build a sophisticated yet straightforward communication protocol to make the forums serve their purpose. 

I hope this helps!