Entrepreneurs creating businesses may end up being first generation family business owners and over time, as the business grows, there will be challenges to these family firms. These issues are often similar to those their non-family business counterparts have to address.
Penny Lovell, head of private clients at Close Brothers Asset Management looks at two of the key issues that have to be addressed, how to maintain family culture as the business expands and how to manage the finances when the business expands:
How to maintain family culture as the business expands
Although it is often difficult for the founder to relinquish some control over their ‘baby’, as the business grows there will not be enough time for them to take responsibility for everything. Business development, production, operations, marketing, financial management and HR etc. and inevitably people must be added to the team.
Care needs to be taken to recruit the right people with the right skills to work in the organisation. However, having spoken to many family business owners over the years, and more recently as part of a Family Business Roadshow across the country, it is clear that the ones that are most successful strive to bring in the best people for the role, be they family members or not… Developing a core, competent team will help to ensure the business has the right management in place to continue to grow.
However, non-family directors and employees will not have the same family heritage and beliefs so it is important that they understand the values and culture of the organisation from the start, even though the culture could undoubtedly evolve and change over time.
There are some steps that will help to ensure that the culture is retained such as:
- Having a clearly articulated vision for the business
- Clearly communicating the core family values and incorporating these into the way the firm operates
- Developing a clear brand that incorporates the values
- Living the values in the business on a daily basis, leading by example and bringing the family culture to life
- Undertaking a clear induction process that includes a brief history of the business, how it all began and the vision for the future
- Evolve the culture with the business and grow them together
- Create the right environment to reflect the culture within
- Clearly communicate to all stakeholders on a regular basis in a consistent manner
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