Strategic Recommendations for Family Owned-Family Controlled Businesses

Strategic Evaluation: As stated in the previous article on diagnostics, with the business and family encountering multiple challenges due to VUCA situations, there’s a strong need for the business and the family to get a strategic lift. Most family-owned and family-controlled under the current circumstances of conflict seem inevitable to convex to a mutually accepted platform. As author, I have witnessed strong signals reflecting the premise of not agreeing upon. Even the weak signals that are non-reflective at the countenance, exhibit traces of non-adaptability between siblings and family members. The founder cum CEO is hell frozen to drive his agenda. What are your observations?

The elements of foresight are completely missing in a hyper competitive world that is competence based. Businesses can survive only when there is an evidence of active engagement by partners in all spheres, be it family and business. Roles and responsibilities need to be clearly defined and so be the succession planning supporting equality in rewards subject to professional competencies.  Only on these parameters the business growth and family harmony can take place. Hopefully the CEOs will agree upon if dissent must have some compelling reasons to do so.

 The following questions posited earlier must draw insights into: 

1. What kind of family business has been until now?
2. What kind of business do they want to be?
3. Hence, How do they reach there?

The strategic intent needs to be aligned with the business purpose, which is a challenge. 

Intermediate assessment

In the interest of the family harmony and family business, an amicable solution must be reached that redefines and creates a clear distinct ownership of each business. Based on assumptions that can be defined, a clear resolute may be designed in responding to the family and family business dilemma. A clear re-defined business ownership suiting each one’s competencies and inheritance is the requirement, where ‘split’ implying ‘segregation’ in family business is inevitable. This discussion came forward having interacted with over 4 dozen founders, founder cum CEOs and family members of closely held family firms. 

Preferred scenarios

Scenarios play an important part in crafting multiple solutions. What is pivot are the powerful assumptions that can drive the business and family. 

1. Scenario 1- The business continues with clear demarcation of business responsibilities, here again based on competencies
2. Scenario 2: Most optimistic is that the business division takes place amicably.
3. Scenario 3: Business consolidation, based on competencies and active engagement, complete ownership be taken over by the competent family incumbent for each defined business. Due to division taking place, the profits of each business for the next 3-5 years (as decided) may equally be shared amongst other business owners. i.e., If there are three businesses with three family incumbents, then each takes over one division and share the profits as an outcome for a decided period with no investment liability. However, this may be complex when the share of business, incumbent and profit margins differ, require more precise incision on advice.
4. Scenario 4: Separation of business in totality with a professional advice

Strategic impact

With this the chances are highly likely to lead into to:

1. Clarity of vision with defined goals for each business responsibility.
2. Strengthening shared values
3. Clarity in the organisational ownership and its operations.
4. Growth trajectory of the business.
5. Even expansion of business based on business opportunities both horizontal and vertical may be witnessed. Since, the family knows the insides of the business, this is not at difficult.
6. Control over emotional issues and creation of an amicable family setup.
7. Reduction of family conflicts and jointly addressing it in a healthy forum.
8. Enhanced professionals connect between the families and businesses.

Strategic recommendations

With the main premise and closing remarks in the diagnostic part, both in the interest of the family harmony and family business, an amicable solution is always desired. There is an urgent need to redefine the business followed by a clear laid down distinct business ownership. If this is operationalised based on competencies, research and evidence says, the chances of both the business and family flourishing in are more. Segregation of the business units to match each one competency is a desirable outcome and may be a preferred one too.

Conclusion

With this, family and business ownership structure will normalise and formalise respectively. There are increased chances of succession planning to keep the family and business legacy by each incumbent in the family. But this has a greater connect with the strategic intent and development of foresight by each family business incumbent. They should be able to deploy the use anticipatory framework while maximising on resources & capabilities. I hope that the founders, co-founders cum CEOs must start thinking on these lines.

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