The holidays are a time for family – that may be a cliché, but it’s a cliché for a reason. For many of us, this time of year is dominated by family gatherings and moments to connect with our loved ones. For family businesses, the holidays provide a unique opportunity to focus on the family, outside the context of the business.
More than just a chance to catch up, coming together as a family is an opportunity to reflect on your shared history and values. It’s also an important vehicle for ensuring these integral parts of the family identity are passed on to future generations.
The importance of sharing family stories
When you are part of a family business, it’s easy to let dealing with the very important detail of day-to-day operations overshadow the need for important conversations about where you’ve been and where you’re going – both as a family and in business.
However, research by psychologists from Emory University strongly suggests that sharing family stories improves family functioning and cohesiveness, and increases the resilience and confidence of younger generations. This study, undertaken by Dr Marshall Duke and his colleague, Robyn Fivush, used 20 questions to measure how well children knew their family history and a series of psychological tests to measure the children’s emotional health and happiness. The results overwhelmingly showed that, knowledge of their family’s history had a significant impact on a child’s behaviour and self-esteem.
With this in mind, we recommend taking the time this holiday season to reinforce your family narrative. If you’re not sure where to start, take a look over the 20 “Do You Know?” questions used in Dr Marshall Duke’s study.
Planning for the upcoming year
Holidays season is also a great time to start thinking about the year ahead. While it may be just another day, January 1st serves as an important mental checkpoint, encouraging us to step back and assess the challenges and triumphs of the past year, and plan how to make the next year even better.
While it’s tempting to focus on small changes that deliver incremental benefits, these will have little impact on the ongoing success and sustainability of your business. As such, we encourage you to commit to making 2023 the year you solidify your future by tackling five of the biggest challenges facing any family business:
- Succession planning: If you want your business to survive the transition to the next generation, you need to have a clearly defined succession plan. Poor transitions and a lack of succession planning is the single biggest factor in the failure of family businesses.
- Operating structure: If you’re like most other family businesses, the way you work has developed organically over time. This may be OK in the founding generation but taking the time next year to formalise and document your processes and structures will help create stability and drive growth in the long-term.
- Social purpose: Your business’ goals and values are a key input for a wide range of operational and investment decisions. If you haven’t done so already, spend some time this year documenting what your business stands for and how you will embody these values internally and reflect these values externally. Consider using this as a way to get the next generation involved.
- Role description & Open Communication: Family business’ goals are more vulnerable to misalignment when family members do not have a clear understanding of their roles and the importance each role plays across the group. Thus, it is worthwhile to spend some time to develop a role description document detailing each member’s responsibilities and share it with everyone. This set of roles should be discussed but never hinder one’s equal voice within the family.
- Relationships extending to the cousin group: Opportunity to spend time with family members of the wider family group is rare. That means there is very little chance to enhance the bond and to get to know each other. Maybe start a discussion with those cousins, uncles or aunties that are working in the business by understanding their roles and what keeps them awake at night?
If you have any questions about sharing your family stories, or need assistance planning for the new year, please contact FINH on +61 7 3229 7333.