Skip to main content

Some believe you must sacrifice family relationships for success in a family business. But in fact, focus on the family doesn't drain business success – it enhances it.

In a recent survey of 1,000 of the world's largest and oldest family businesses, EY found that those focused on family cohesion and profitable business growth were the most successful. Regardless of the company's size or industry, there are several steps companies can take to build stronger family ties and more successful business:

Plan today for tomorrow

Story continues below advertisement

Succession planning is a topic that many family business owners shy away from, as it forces them to confront emotional issues like planning for retirement and death. The reality is that approximately 70 per cent of family businesses do not effectively transition over to the second generation. Family business leaders who start planning for succession early on will be in a better position to determine whether to transition the company over to the next generation – or make strategic decisions around the sale of the business.

Owner must look objectively at whether the business should be passed down to the next generation, transitioned to a third party or sold altogether. Factors such as age, desire, skill set, management experience, family dynamics and the current state of the business should all be considered when deciding how the business will be led when it's time to exit.

They should also solicit advice from trusted advisers who can evaluate the practical aspects of the plan. Once details of the succession are in place, it's important to communicate the plan to first-generation shareholders as well as ensure enough time to transition to the second-generation leader.

Keep the peace

Conflict often arises when family members are unclear of the role they play in the business. Not all family members may be cut out for the business or possess the proper skill set to be in leadership positions. It's essential that all members evaluate their skills as well as determine how they would like to be involved in the day-to-day management and operation of the business. For some, playing an active role may not be the right fit.

When family members understand their roles and responsibilities, there is less room for confusion and misunderstanding. Having a sense of one's place in the family business is a primary driver in optimizing both family cohesion and profitable growth of the company.

Look beyond the comfort zone

Story continues below advertisement

Finding the right balance between growing the business and maintaining control can be difficult for family business owners. Access to capital is critical for any business and many leaders struggle with the idea of having to potentially give up shares in the company to achieve financial targets.

It's important for family shareholders inside or outside the company to understand the company's vision, strategy and financial targets. Many families may need to adjust their attitudes about financing the business to secure capital to carry the business forward. Maintaining transparency around financing decisions with key stakeholders in the business helps develop confidence and commitment to its future.

David Fabian and David Steinberg are the national co-leaders of the private mid-market practice at EY. Follow them @EY_CAPrivateCo and follow David Steinberg @SteinbergPMM.

Follow Report on Small Business on Pinterest and Instagram
Join our Small Business LinkedIn group
Add us to your circles
Sign up for our weekly newsletter

Report an error
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter