Magic Johnson, Jessica Alba and Robert Gibbs brought some major star power to Sage Summit, held in July in Las Vegas, but the speakers who made the biggest impact on me were those on the panel that I moderated, featuring advice on the challenges faced by family-owned businesses.
All three panelists were from family-owned businesses themselves: RE Suspension, Abbey Color and Snoozer Pet Products. The insights these speakers shared were invaluable for anyone thinking about starting or getting involved in a family-owned business.
Below are five key lessons I took from this panel session:
1. Identify the final decision maker
It seems like a simple concept — making sure there is a decision plan before a decision has to be made can reduce conflict. But the consensus was that this concept is anything but simple.
All three company representatives identified struggles around having a defined structure when it comes to making a decision. Gary O’Donnell of Snoozer Pet Products said that having a defined chain of command is key to making the best decisions for the company.
Roger Nielsen of Abbey Color agreed, and suggested someone be identified as the final decision maker as to alleviate any back and forth and major disagreements. This will avoid future family fighting and ensure a decision can be made instead of doing rounds and rounds of arguments that can stall forward movement.
2. Identify skill sets and invest in them
This tip came from family members who came into the business from the corporate world. Often family businesses just run the business without identifying who should be focused on what and who is best to do that role.
O’Donnell came from a marketing background and can now bring that expertise into the business. He suggested being very clear about skills and responsibilities for each person.
Carrie Enders from RE Suspension agreed, and said that identifying a particular role for every person helps with internal conflict. This should be done down to the micro level, such as who cleans, who schedules vacations, etc.
Nielsen said that he and his family members attend workshops and receive outside counsel on their roles so that they continue to learn best practices so the business continues to grow and succeed.
The big takeaway: the more you invest in the skills of the family, the better you set the standards for roles and responsibilities.
3. Create a transition plan for the next generation
Family businesses are supposed to be just that — made of family. Make sure there is a plan to pass the business along to the next generation.
In addition to the panel addressing the transition issue, several audience members had concerns and questions about moving from one generation to the next. Nielsen, who is currently in the process of transitioning out of the business to have his children take the lead, advised the audience to make sure the next generation has a clear understanding of what needs to be done, and that they are part of that decision making process.
Most importantly for those passing the baton: Don’t “nag” as you transition out, but do be sure to pass along helpful experience and knowledge to younger generations to continue success.
4. Create a board of directors
Nielsen also advised family-owned businesses create a board of directors to include lawyers and accountants that work with the business to routinely give feedback on the direction of the company.
Enders said that RE Suspension relies on a board of advisors called “state of business” for a quarterly review to keep them on track. Mentorship and outside guidance is a great tip that every business can and should implement.
5. Family-owned is worth it
When asked, each panel member said that they didn’t want to go back to the corporate world and were very satisfied running or being part of their family-owned business.
When asked for one word of advice the panel members replied:
“Have fun,” said O’Donnell.
“Family comes first,” said Enders.
“Family means success,” said Nielsen.
Need more tips? Your business can start and thrive with Sage Software.