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Today, family businesses are turning their weaknesses to their strengths and are quickly transitioning to professional companies.
That’s why, experts believe that the 21st century belongs to family-owned businesses.
If you want to follow their footsteps and transform your family business to a professional one, here are four best practices that can help you succeed.
Plan for Long-Termism
It’s in the very nature of family-owned businesses to think long-term. That’s because they feel a sense of ownership for the business they have built—or inherited—and hence its longevity is their concern.
This inherent ability to plan long-term helps companies sustain their businesses and that helps them turn their small family-outfit to a professional one.
As a result, family firms are more likely to reinvest their profits within the business. “This, in turn, allows them to innovate and invest in new products and services, as they have the ability to plan for the longer term. They can look at their expansion on a more strategic level,” says Fiona Graham, Communications Director at the Institute for Family Business (IFB), in an article in European CEO.
Innovate with Technology
Family firms have realised that technology is a game changer and it empowers organisations with tools to innovate. In a survey conducted by EY, 50% of family businesses said they will use additional finances to develop new products with new technology.
There are various ways to achieve that. For example, technology like big data analytics can help family businesses figure which geography has the most—or the least—demand for a product. And depending on the results, business leaders can decide where to market their products more. This way, they can use analytics to figure what works in a market and what doesn’t.
In addition, they can also use sentiment analysis and social listening tools to understand what customers are saying about their products or services and then innovate on the basis of customer feedback.
Hire Non-Family Members for Key Positions
What’s changing in the family-owned business’ strategy for growth and sustainability is the inclusion of non-family members in key positions.
According to a survey by EY titled Built to Last: Family Businesses Lead the Way to Sustainable Growth, family firms know that they need to absorb the best practices from the corporate world. One in six firms said that bringing non-family members into key positions had been a motivator of governance change over the past three years.
Another advantage of including non-family executives in key positions is that they bring in an outsider’s perspective to the family business. This leads to increased innovation. They also bring their experience and professionalism into the family business.
Listen to the Younger Generation
Today, the biggest and most influential consumer for any business is a millennial. Every business is trying to mold itself to their needs, demands and expectations.
That’s why, it is important for family firms to lend an ear to the youngsters or millennials in their organisations. The fact that they are millennials themselves gives your firm an upper hand in getting into the minds of your millennial customers. That could be a huge competitive differentiator.
Millennials also bring new technology to the fore and help family firms transition to a professional one just on the basis of innovation and better understanding of the customer.
And all of that contributes to transforming a family business into a professional one.
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