Family enterprises have long been considered a foundation of the American economy. Many of the most notable family names in our history are connected to long-term family businesses and philanthropies (Ford, DuPont, Rockefeller, Forbes and Johnson). And, the more recent entrepreneurial efforts of Steve Jobs, Bill Gates and Warren Buffett have led to growing wealth for those founders and their families, as well as for those who’ve invested in or worked with them.
But, the world isn’t the same as when these historical families grew their businesses into enterprises. The same characteristics that positively defined family enterprise are being challenged. To deal with the rapid changes in the global economy and information flow, family enterprises need to adjust their thinking and plan more broadly for their futures. Sustainability no longer seems to imply homeostasis, keeping the legacy as is or remaining as before.
Rather than thinking of sustainability as continuing what is, it’s increasingly important to think of it as a process of adapting to and evolving with change so that family resources are preserved or, perhaps, enhanced. To achieve such goals, the family needs to have some best practices in place before larger evolutionary changes are necessary.
- Having a mission, vision and strategic plan for the family provides a roadmap for such decision-making
- Holding meetings of the family and shareholders at least annually
- Conducting a review of the overall family economic growth policies, answering such questions as:
- How long should we continue in our current line(s) of business?
- What would an exit look like for one or all of us?
- What are the markers we’ll need to use to determine continuation in our endeavors?
- What ways can we expand our portfolio of options that will be interesting and rewarding?
Building a stronger foundation as a family to gather as a unit to talk about the challenges they may currently be facing or are likely to face is paramount in order to have the kind of personal connections and understanding of one another that permits these types of discussions. These kinds of connections are built over time with a commitment of resources and effort.
Familial connections also provide process, structure and ease in informing family and shareholders and the format for making rapid decisions. Family members are up-to-date on the status of the company and the other family holdings and can feel connected to the decisions facing them. Those who’ll be living with the decisions should participate in making them. They can feel confident that the path forward toward progress is clear, achievable and sustainable.
For more on best practices to promote family sustainability, click here to read the full article.