Successful Ways to Guide Your Family Business During Hard Times

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Today’s struggling economy has affected many businesses, especially those that are family owned and operated. Demographics, technology and economics are now converging problems, leaving businesses with questions like “where did all the baby boomers go?,” “how can I compete with technology?,” and “how do we battle external challenges?”  

Is there a successful way to guide your family business through tough and changing times? Of course! Here are a couple of steps to follow to help guide your business in the right direction, courtesy of financialpost.com.

Step 1: Ask a few questions – Is your business stable? Figure it out by asking a few question like, “Are we generating or burning through cash?” “Are we losing key internal resources through competition, or market obsolescence eliminating lines of business or key staff departures?” “Is the business value flat, increasing or declining?” “Are there key things the business needs to add to remain stable?” and “Will investments need to be made just to maintain the business?”  

What type of questions do you ask when evaluating your business? 

Step 2: Companies that are currently unstable, should use this step to figure out who really owns the business.

“The stark reality is it is that person’s sole responsibility to stabilize the business. This could involve injecting money into the business or other hard choices. This may not be as simple as looking at the shareholder agreement or list of current shareholders with family-owned companies. Until the business is stable, you can’t look too far into the future generations seeking responsibility to address current challenges,” (FinancialPost.com).

This is at the core of most problems plaguing many western countries: no one wants to own the problem of “crushing debt burdens and social decline,” therefore, no one is truly invested in solving it (FinancialPost.com).

To break this vicious cycle, the actual owners of the business must work to stabilize the business and solve the current challenges. Why is this important? “Passing on an unstable business to the next generation is equivalent to tossing them a grenade after the pin has been pulled,” (FinancialPost.com).

Is there a problem you've been avoiding to correct because it doesn't directly concern your future? Is there an issue someone higher up is refusing to address? 

Step 3: Create a decision-making mechanism by any means. “Once the state of the business is understood and the decision making body is assembled, how does this group make decisions to attain stability? Unanimous agreement? Democratically, one person one vote? Or corporately, one share one vote? Or does one person or camp take control, either with the acquiescence of the others or in a more hostile situation?” (FinancialPost.com).

Don’t allow your company to become paralyzed and end up a victim of circumstance. Hard to specify what movement is needed, but decisions need to be made, and there is no perfect template – figure out what works best for your structure.

How does your business make decisions? Who holds the most weight, or is every one's voted equally weighed? Does your company have a decision-making mechanism already in place?  

Do you think these tips can help your family business? Answer our questions and let us know on our Facebook page, linked HERE.