Every family has a secret ingredient in a much-beloved recipe that makes it, well, “yours.” Often the elusive element is much simpler than you might think, like salted versus unsalted butter, a dash of vanilla extract, or an everyday spice.
But is there a secret ingredient to making your small business last for generations, like your grandmother’s pie?
If your goal is to build a family-owned and operated company for decades, it must persevere and prosper during inevitable financial and interpersonal ups and downs. Let’s dive into the secrets of survival in family businesses.
Create A Resilient and Timeless Values and Mission Statement
Your business’s mission statement and values should depict two things: what your company does and why it does it. Family businesses are very intentional about their values and mission—and that’s critical for employee buy-in, customer acquisition and retention, engaged leadership, smoother operations, company culture, and more.
Your mission, vision, and values are the foundation of your small business—and to pack that into a sentence or two may seem a little intimidating. Construct something that taps into your core values but can also grow with you. The U.S. constitution is the ultimate example of a mission statement that is powerful and can stand the test of time.
When creating a mission statement, keep these best practices in mind:
- Be concise. Limit your mission statement to 1-3 sentences. If you can’t get your purpose across within that limit, you may be doing too much!
- Think long-term. A mission statement should describe your company’s future and the long-term goals it hopes to achieve.
- Make it a team effort. Ask your employees and leadership what they think—they may bring up some points you haven’t thoughts of.
- Shoot for the stars. Don’t limit yourself! This mission statement should inspire you, your employees, and your customers.
A business’s mission statement is more than just a sentence to put on a website. It’s a powerful message that can drive success.
Embrace Innovation and Growth
The business landscape will always change, and the companies that survive don’t simply accept change; they invite it. They look for every possible opportunity to grow.
One way to boost innovation is to prioritize diversity in the hiring process. Diversity is about embracing the differences that each individual brings to the workplace. And it’s shown that companies with higher diversity scores report significantly more revenue from innovation.
Diversity includes, but is not limited to:
- Socioeconomic status
- Sexual orientation
Another way to embrace innovation is to lead with a “learn-first” mindset. You can always do better, and being open to new ideas can help foster growth-oriented culture.
Keep A Close Eye On The Bottom Line
Many family businesses keep a close eye on their profits and losses. They have a good sense of what’s coming in, what’s going out, and how they’re saving the balance.
Yes, debt can be good leverage and help your family business get ahead, but only when used appropriately. Historically, family businesses have been warier of taking on excessive debt than their larger corporate counterparts, which has helped them survive long-term.
The bottom line numbers are an essential component of a company’s success. To survive the many challenges of today’s economy, small businesses need to understand all of the factors that impact their bottom line.
Prioritize Company Culture and Employee Retention
Typically, family-run businesses are better at keeping top talent than corporate giants (like Amazon, Twitter, Google, etc.).
Your employees are what keep the business running smoothly every day. They’re bringing their all, and when they’re inspired, treated well, compensated appropriately, and encouraged to grow, you set them and your company up to thrive.
A positive workplace culture stems from your business’ values and mission, but it is also heavily impacted by your hiring practices. Be intentional about who you hire and who you choose for your leadership team.
Attracting top talent isn’t enough, you also have to retain them. To do this, your small business should consider competitive compensation, employee benefits, development and continuing education, and focus heavily on training.
Select and Train The Right Successor
Choosing and training the right successor takes time and effort. If you want to keep the business in the family, you must select the best person for the job.
Gage interest from your family and then take the time to train them thoughtfully. You may have them start out at the bottom and work their way up. Having them work at the company and learn the ropes may help them gain respect from your employees and give them a better foundation to take over.
One of the most important things to remember when training your successor is that they will not be a carbon copy of you. Your successor should bring new ideas to the table while keeping the company’s mission and values at the heart of every decision.
Create A Succession Plan Years In Advance
The changing of the guards is critical for lasting family businesses. To further grow your company and ensure a smooth transition, you need a comprehensive succession plan in place sooner rather than later.
Start thinking about and planning for succession years (even a decade) in advance to give you time to make the best decision. With so much time to prepare, you will feel more than ready when the day comes to pass the torch.
You may have some questions as you build and improve your small business. Whether you seek advice about building a positive company culture, choosing your successor, or creating a strong mission statement, we’re here to help. Get in touch with us today.
Craig Toberman is the Founder of Toberman Wealth – a fee-only financial advisor based in St. Louis. He assists families and businesses with strategic financial planning and long-term wealth management. He has over a decade of experience in financial services and has crafted custom financial plans for hundreds of families and businesses.
Craig received a Bachelor of Science (B.S.) degree in Agricultural and Consumer Economics from the University of Illinois and a Master of Business Administration (M.B.A.) degree in Finance from Saint Louis University. He is a Certified Financial Planner (CFP), Chartered Financial Analyst (CFA) charterholder, and Certified Public Accountant (CPA).
Craig is a member of the National Association of Personal Financial Advisors (NAPFA), Fee-Only Network, and XY Planning Network.
Craig lives in the greater St. Louis area with his wife, Ally and son, Hank.