Structured growth for your family business
Family businesses account for a major portion of enterprises launched each year; however, few of them ever make it past the start-up stage. Starting a business and working with family members can be quite challenging, mostly due to the additional baggage of family relationships.
On the bright side, businesses run by families are quite capable of realizing consistent growth and expansion, provided they are well set up and managed from the beginning. These ventures benefit from having a ready and dedicated pool of committed people who are willing to make sacrifices to see them succeed.
Like any other business, a family enterprise needs to be adequately equipped to handle growth. Failure to do so leaves the venture vulnerable to problems that may eventually kill it. In order to successfully guide their companies through a growth phase, family entrepreneurs need to come up with effective expansion strategies. They need to know how to conquer new markets or launch novel products without losing sight of their core business. This calls for a delicate balancing act since they have to attract fresh customers whilst retaining their old clients.
Growth often comes with additional hurdles and both big and small businesses struggle to manage the accompanying changes. Those aiming at structured growth for their family businesses should keep these key things in mind:
Maintenance of a clear organizational structure. As a family enterprise grows, the temptation to stray away from the original organizational structure may arise. This is not advisable as it is better to operate a more solid and streamlined organization. Family members should take up different managerial positions with clearly spelt out job titles and functions to avoid conflicts and duplication of duties.
Open and regular communication. It is also important for a family business to have an effective communication structure. Information should be passed to all employees in such a way that non-family employees in the organization do not feel ignored. Furthermore, regular meetings ought to be held to assess the company’s progress and to iron out any disputes.
Efficient organizational systems and procedures. Growing companies require useful systems that will drive business operations. Owners of family enterprises need to take advantage of Online ERP (ERP) software programs. ERP systems assist in integrating all business management functions, increasing company efficiency while boosting profits. They also aid in coordinating business activities in an organization and are especially useful for growing companies that need to manage their resources and different procedures.
Keeping growth in check. Unchecked business expansion can do more harm than good. Business owners should ensure they gradually plough back profits into their organizations in order to maintain a steady cash flow. Utilizing all the profits at one go might result in financial instability.
Receiving relevant outside advice. As family companies grow, there is a need to hire outside consultants and advisers to inject fresh and innovative ideas into the organization. This is helpful as family members sometimes fail to see the bigger picture- a situation that can result in business stagnation if ignored. Original ideas can open up new horizons for family businesses.