It has been said that in the next five or six years, 40% of all family enterprises will change hands. That means that every year, thousands of family companies are wrestling with issues like management transition, successor development and ownership transfer. However, working on transition issues may not amount to much if you haven’t taken steps to keep the entrepreneurial spirit alive.
There’s no question that many family companies were founded by people with extraordinary vision and passion. But where do things stand in your business today? Take a look at these characteristics of entrepreneurs and entrepreneurial companies and answer the questions for yourself. Just how entrepreneurial is your family business?
Creativity
In some family enterprises, there’s an unspoken belief that creativity is reserved for writers and musicians. In others, there’s an underlying mindset of “this is the way we’ve always done it.” Either attitude can stifle creativity, which is a precursor to innovation, which is essential to entrepreneurship. Creativity comes in many forms – the ability to generate multiple approaches to a problem, having heightened perceptions or awareness, seeing things differently or seeing different things. Which of those creative talents are present in your business? What are you doing to develop them?
Growth Orientation
Think for a moment: In the last year, what specific plans have you made to pursue a new area of growth for your business? How motivated are family members and non-family managers to pursue strategic growth opportunities? An entrepreneurial family company can be both prudent and opportunistic – they’re not mutually exclusive – and both involve an orientation to growth. How prudent is it, after all, to stay in the same place you were last year?
Adaptability
In a family enterprise, there are many good reasons to honor and respect past traditions. However, this must be balanced with the need to adapt to changes in the family, the structure of the business and to the marketplace. When was the last time your company ventured out of its comfort zone? Is your family business a model of flexibility and enthusiasm for change? Are you?
Future Focus
A majority of family companies say they want to continue family ownership through the next generation; one of the great strengths of family companies is the ability to take the long view. Paradoxically, a great weakness of many is a failure to plan for the future. How committed is your family business to a long-term, forward-looking business strategy? What concrete plans have you made that demonstrate your commitment?
Self-Determination
Great entrepreneurs are determined to win. They love what they do, do whatever it takes, and good or bad, are willing to live with the results. But entrepreneurial parents may unconsciously encourage just the opposite from their children. Parents naturally want to take care of their children and to protect them from painful experiences. Unfortunately, the best intentions can dampen the entrepreneurial spirit. The best way to protect the next generation is to encourage self-determined behavior. Do your next generation leaders set challenging goals for themselves? Do they take the initiative to reach those goals? Do you allow them to make choices and experience the consequences?
If your answers to the questions above indicate that you need to rekindle the entrepreneurial spark, what steps will you take? If entrepreneurship is alive and well in your family business, we invite you to share your successes and insights with others here.
