Five Best Practices for Family Businesses in 2016

Five Best Practices for Family Businesses in 2016

In my Business Spectator article this month I’ve mapped out Five Best Practices for business success in 2016 and subsequent years.The start of the calendar year is a great time to stop and reflect on what works. – David Harland, Managing Director of FINH

Make online work for you

As if there was any doubt left,

the world will be entering 2016 firmly in the digital age. Consumers expect their businesses to have an internet presence, whether it be sales, advertising, customer support or general product and service information.

Google research found that 55 per cent of global online purchases in 2014 occurred within 60 minutes of the original search; most were far faster than that. Your family business will be left behind if it customers can’t find it quickly and easily.

Do some market research and speak with a web expert. Make sure your homepage is attractive and simple. Magnify its user experience (UX, in industry terms). Remember: the more clicks you generate, the more likely you are to show up on a search engine.

Finally, don’t forget about cyber security. Protect your information and your customers’ online information from outside threats.

Create or review succession plans

I strongly believe in a formal governance structure and succession plan for each family business. My years of experience with many successful family businesses taught me that healthy companies think through their succession challenges before emotions take over the picture. This is not just a step for 2016; it’s a step for 2017 and decades into the future.

In order to set up a good succession plan, however, you need a good governance structure — something that acts as a formal contract between parties about major issues: communication, decision-making, separation between family and business matters, dispute resolution, and succession.

Very few family businesses survive to a third generation. The numbers are overwhelming. Why work for years and years only to throw it away because of ineffective or poorly thought out planning? Speak with your family, speak with your adviser, create a plan and prepare your business for a long and happy future.

Start grooming the next generation

Take a lesson from George Wooten Jr., a fourth-generation president of the Wayne E. Bailey Produce Company, a major sweet potato producer out of the United States. Wooten currently runs the company with the help of his two sons, Adam and George III, and he knows first-hand the value in on-the-job generational training.

“Some people say it’s better for your children to go work other places before going into the family business,” Wooten told the Axial Network, an American network for private equity activity.

“That may be the case, but I really needed my sons’ help.”

Wooten brought in a more experienced outside manager to mentor George III after the boy had finished college. George III studied in that capacity for years — almost a Graduate Program in the Wayne E. Bailey Produce Company.

Second son Adam, meanwhile, began training in operations. His chosen mentor was an associate and former plant manager at Heinz Tomato Ketchup company. Wooten chose to use non-family mentors for each because the Wooten family dynamic was such that, as he put it, “it’s hard working with your own flesh and blood.”

Why? The Wooten family experience had demonstrated that business disputes would continue at the home “if you’re not careful.” Still, if the younger boys are ever going to build on the successes of their father (the company boosted its workforce to 125 people in 2015), he knew they were going to need plenty of grooming.

The Wooten model won’t work for every family business; each family dynamic is different. What’s important is that you work together with your family and your advisers to create your own unique plan to ready the next generation of leaders.

Step up your philanthropy game

I’ve already written about the excellent work that many family businesses do in Australia and elsewhere in the world. Family businesses are very important to their communities and those communities can create loyal, repeatable business opportunities as long as they feel they are being treated well. From a personal standpoint, studies show that happiness goes up whenever you provide for others; take care of your community and take care of yourself.

The laws allow for lots of creative tax breaks for philanthropic business. If you have the capital, establish a Private Ancillary Fund (PAF). Even if you don’t have the structure or capacity for new tools, try being charitable with your consumers and your local community. It can certainly help separate your business from the pack.

Build trust with your family business brand

Branding is incredibly important. Family businesses already have a leg up because they have a reputation as more trustworthy and wholesome than other companies, but you can really separate yourself by driving that point home.

The Harvard Business Review released a study in April about why customers (and employees) prefer a family business. Some of these reasons included a more personal touch, shared experiences with ownership, philanthropic activity, and a perception that it’s not all about profits.

Do your customers know you’re a family business? That you’ve been a part of the community for years? Even if you haven’t maybe stress why you and your family love their part of town and how you all are part of the same group. Customers and clients should identify with you; make your brand part of the fabric of the community.

For Advice on best practices for your family business please call FINH 07 3229 7333

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