Ultimately, there are only three things you can do with your business: you can close it (which might lead to bankruptcy), you can sell it to a stranger, or you can keep it in your family. This article will explore how a business can be passed from one generation to the next – the Dynasty Family Business.
A family business will not become a Dynasty Family Business simply because they DO have these characteristics; rather, the absence of these characteristics PREVENTS a family business from becoming a Dynasty Family Business.
For a Family Business can become a Dynasty Family Business, it has to be a BUSINESS. A business is different from a job. A business is based on a “vision, has a series of systems which produce a predictable result, has more value than a job and is easier to convey to another generation. A job is based on a “task” and it is what you do to achieve those results. To be dynastic, the business and its vision must be dynamic – NOT static – and the owners (the decision makers) of the business have to be willing to consider changes in industry and operations.
The Culture is important too. Every business has a culture which is sometimes called an environment or an atmosphere. The culture of the business should reflect the mission of the business. A few examples are, a manufacturing company may emphasize accuracy, while a restaurant should offer cleanliness and cheerfulness, and a law firm should be confident and accomplished. Everyone, from the top on down, has to constantly be evolving as to how the business operates and how they themselves operate in the business.
When it comes to compensation, this should reflect the value of the individual to the business. Over or under compensation can negatively impact the company’s culture.
Communication and training are key. Future leaders of the business should have real and extensive experience in the operations of the business. Family members should hold “real” board meetings. The meetings should have an agenda, and minutes should be kept of what was discussed and any changes being made moving forward. Issues should be considered relating to the strategy of the business. When the business is operating successfully, it will be noticed economically and it will provide a value to customers and clients.
The family member who becomes an owner must be qualified and has to share BOTH the “vision” and the passion of the founder, and this person has to be knowledgeable as to ALL aspects of the business. This again requires communication and training, and time. “Family”, for this purpose, is not limited to only biologic relations or marriage.
To continue reading more about The Dynasty Family Business, see part two, which will be posted on June 1, 2017.