What makes a family business successful? What causes a family business to fail?

This past week I was asked these same two questions on two different occasions. The first time was by a reporter writing an article on family business. The second was by a business owner looking to expand his leadership view with some new perspective. 

There’s a reason that success and failure questions are asked continually and repeatedly. It’s because people just like you, who focus on awareness and development, value the opportunity to learn. To replicate success and avoid failure whenever and wherever possible. This is why, when a question is asked multiple times in the same week, it’s worth writing about.

What makes a family business successful?

Success in family business is first about the mindset. It’s a willingness on the part of leaders within the business to be open, to step back, to continually assess how it can be done better—how they better prepare for the future. It’s learning the intricate balance between family dynamics, people and processes.

No list is all inclusive, and a list can be useful or it can be useless depending on your view and application. With that being said, here are eight mindset factors that when applied by leaders, make family businesses successful.

8 Mindsets that Matter:

  1. Sales and profits are viewed as outcomes, rather than exclusive targets.
  2. Strategy is simplified to four key elements: Think, Plan, Do, Measure.
  3. Do the right thing.
  4. Be relentlessly aware externally and internally.
  5. Maintain an advancing perspective.
  6. Develop and execute a plan of growth and evolution.
  7. Maintain the heart, passion, purpose and commitment.
  8. Define and execute a relentlessly disciplined approach that minimizes blind spots and replaces them with inputs that are objectively reliable, repeatable and predictable.

What causes a family business to fail?

Failure in family business is also about mindset. It’s an unwillingness on the part of leaders within the business to be open, to step back, to continually assess how it can be done better—to deny that they can be better prepared for the future. They fail to learn or understand the intricate balance between family dynamics, people and processes.

I call it the functional dysfunction of family business and it’s ultimately what causes family businesses to fail.

Functional Dysfunction usually manifests in one of three ways:

  1. Leadership Dysfunction- which includes a distorted view, blind spots and subjective bias that prohibits growth and evolution beyond the thought or intent.
  2. Family Dynamics – which deal with the boundaries of interacting with and loving one another outside and inside the business.
  3. Preservation Pressures – which connect to the desire of leaving a lasting legacy.

#Thoughtstarters

  • How do you define success in your role?
  • How open are you to step back, to continually assess how it can be done better?
  • How can you better prepare for the future?
  • When you have confronted failure what has it taught you?

Until Next Week,
Brent

Thoughts? I’d love to hear them in the comments.

In case you missed it: 

Expand the Sphere: Why Emerging Leaders Need to Define and Develop Strategic Relationships

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