As a family business owner, you’ve likely given your heart and soul to building and running your organization.
Whether you started from scratch or inherited the company from a parent or other relative, you know the ins and outs of your operation. You might have plans to scale your business for future growth or pass it down to a relative who shows interest in running it.
One factor that’s crucial to business growth is outside advisory. At some point, you’ll need a set of objective eyes to identify the limitations of your organization and suggest ways to overcome them.
An experienced marketing director could create a holistic digital advertising strategy. At the same time, a CFO could lend their expertise to preparing your business for outside investment or expansion.
Business owners often are unwilling to turn over the reins of their major responsibilities to outsiders. They’ve handled the duties for so long that they become resistant to change. Other times, they may feel the organization to be their brainchild and be reluctant to listen to outside criticism.
However, seeking advice from an experienced professional, and bringing them into the internal operations of your business, is often beneficial for your organization and customers. Let’s uncover why.
There are several stages when it’s critical for a family business owner to bring in outsiders. Here are a few.
The thrill of starting a new business is exciting; the owner has a great idea, they’ve found a market for their products or services, and they’re ready to get started. However, new owners aren’t always up to speed with local regulations associated with starting a business.
Often, they can benefit from a lawyer who can ensure they follow the proper procedures for obtaining a business license and setting up their entity structure. A CPA can assist them in setting up their accounting systems and handling their federal, state, payroll, and sales tax filings.
When a business owner notices sales declining or a significant customer cancels their contract, it’s critical to seek outside help. Bringing on an experienced executive can help the business owner discover where they’re making mistakes and how they can get on better footing.
It’s crucial not to rely on family members for guidance during this time. Usually, they’re too close to the organization to make objective recommendations. Instead, consider hiring someone with prior leadership experience who can assist as a consultant.
When a parent or other relative passes down a business for another family member to run, there may be some initial hiccups. Unless the family member has extensive training in the business, they may have difficulty moving the organization forward.
If the business changes ownership from a single person to multiple people, it’s wise to seek outside help. An outsider can provide unbiased advice, whereas family members may act with their own interests in mind — interests that may not align with the business itself.
Hiring qualified leaders to run the business can also reduce the time new owners need to spend on company operations if they have other outside responsibilities.
If your family business is very successful, you may be ready to open new locations or otherwise expand your market reach. However, before you turn on the burner and prepare for action, it’s smart to bring on additional leaders who share your vision and can support your goals.
Expanding a business typically results in many more responsibilities, which may prove impossible for a single owner to keep up with. Hiring new leaders and executives can streamline the process, increasing your chances for success and ensuring you’re not overlooking critical objectives.
It’s often challenging for business owners to give some of their oversight to new leaders, whether they’re family members or not. Founders are used to calling the shots, and they’ve created their success based on their past actions.
However, if you genuinely want to see your business grow and are ready for the next step, accepting advice from experienced managers is vital.
Here are a few things to remember as you open your business to new advisors.
One of the best things you can do for yourself and your organization is to be open to others’ opinions. If you’re unwilling to listen to someone else’s advice concerning your business, the relationship won’t work.
When you look for someone to assist you with the leadership functions of your organization, seek out someone you feel comfortable with but who can also stand up to you when they disagree with your ideas. If you hire someone who always agrees with you, you won’t realize the benefits you seek from the relationship.
When you bring on new leadership, your role as the final arbiter of company decisions changes. Your new leaders will share some of your responsibilities and may take over some of them entirely.
Setting up a new governance policy is advisable to prepare appropriately and avoid misunderstandings. You should clearly outline the tasks you’ll be responsible for and the decisions that your new leaders will oversee.
For instance, if you hire a new CHRO, you’ll want to grant them full responsibility for overseeing your hiring practices. Similarly, a CFO should maintain control of your accounting, budgeting, and compliance activities.
Having several new leaders, rather than just one, can reduce the risk of the founder falling into old habits of running the organization. With multiple managers, you’ll receive input from several people who have expertise in their respective fields.
Combined expertise often leads to better results for a family business, moving it from the realms of a small business to one prepared for the future.
One of the primary challenges founders face is their own limitations. In the early days of an organization, making all the decisions yourself is typical. However, when it comes time to transition to the next level, hiring outside leadership can bring new life into the company’s objectives and vision for the future.
Our hands-on family business recruiters have experience working with family businesses and family offices small and large. Clients are typically $50 million in revenue or have assets over one billion dollars. Successful placements span the entire C-Suite, including the role of CEO, Chief Operating Officer, Chief Financial Officer, Chief Marketing Officer, Chief Security Officer, Chief Technology Officer, as well as vice president, general counsel, and other director-level leadership roles.
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