What does it mean to be the heir of a family enterprise? Is it your personal fiefdom, to use as you see fit; or is it a legacy of which you are assigned the honourable task of caretaking – preserving it, and perhaps building on the legacy, to be handed on to the generation which follows you?
Here are seven ways in which you can become a successful steward of your family business during your time at the top.
Recognise that the inheritance is not yours to keep, but yours to pass on
While an heir inherits, a steward manages an asset for the benefit of others. Rather than seeing the business as your entitlement, reframe your role from that of heir, to that of caretaker.
As a steward, you will be managing the business so that the whole family benefits, and with the purpose of guiding it forwards for a successful handover to the next generation.
Maintain family bonds
So often, family firms are torn apart by strife and discord – family politics and sibling rivalry. As steward of the business, it’s your role, not to eliminate your rivals, but to lead – keep the peace and nurture strong bonds within the family.
Invest time and money in the future of your business
There’s many an impatient heir who cannot wait to get their paws on the family cash. But before you use the family business as your personal account, stop and think.
A steward will invest both time and money in developing the business, not just maintaining it, but also enhancing the legacy for future generations.
Engage with and nurture your employees
Abuse of power and a flagrant use of company assets for your own use will not win over your co-workers. Your family empire has a wealth of human capital which it cannot afford to lose. A family steward recognises the value of human resources and will work tirelessly to ensure that they remain within the family fold.
Ensure that family and non-family employees alike are given equal opportunity to develop their knowledge, skills and talents, to grow in their careers and to make positive contributions to the business.
Streamline organisational structure and processes
As steward over the family empire, it’s your role to maximise efficiency and therefore profitability. Family enterprises have a tendency to become unwieldy and to support family members who may not actually be making any contribution to the bottom line. If you see any family members who are not pulling their weight, or adding real value, cut them loose or assign them a different role. If you wish to hand over a profitable business to the next generation, you need to know when – and how – to streamline the business.
Exercise financial responsibility
Without sound financial management, your family firm faces a bleak future. Do you want to go down in history as the one who bankrupt the family business? If not, keep the following top-of-mind at all times:
- Know where the money is being spent, and by whom
- If you’re not financially literate, take a course
- Appoint trustworthy, reliable, and appropriately qualified people to key positions
- Get a firm grip on your cash flow
- Pay your taxes
- Invest wisely.
Hold yourself accountable
When US President Truman held office, he had a sign on his desk in the Oval Office which read ‘The Buck Stops Here’. Weak family heirs pass the buck, blaming everyone but themselves for their own undoing.
As the responsible steward over the assets of your family business, you must accept full responsibility for the successes and failures of the business.