When we start out in our family businesses, we know all the answers and seldom seek advice.
We keep strategy in our heads and rarely see a need to share it with others. Family members are managing their own areas of responsibility with little overlap between them. We’re able to operate pretty effectively within our silos.
But then “growth” happens.
When the business begins to grow rapidly, we begin to realize we can’t continue to do everything ourselves. We need the help of others and begin to openly share strategy and decision-making with others.
Signs that we need to involve others:
- Unfinished projects
- Haphazard changing priorities
- Missed deadlines
- Low employee morale
- Increased turnover
- Reacting rather than planning
- Missed opportunities
For the first time, we needed to develop a management team by delegating responsibilities and sharing strategy with others outside of the family.
Why so long to develop a team?
- Feeling we can do it alone
- Nobody else knows the business as well as we do
- It’ll take too long to get others up to speed
- Lack of confidence
- Lack of trust
- Fear of loss of control
Sometimes we need a disruption to motivate us to begin forming a team and increase employee participation outside of the family.
What motivated our business to get started was the beginning of consolidation within our industry. Small-to-midsize businesses were being acquired and folded into larger conglomerates. We had to grow our business rapidly to remain competitive. This growth involved mergers and acquisitions for the first time. Our lack of experience in this new area required us to go outside for management expertise and formalize our strategic planning. A hidden benefit was inviting more employees to participate in the planning process and more actively involved in the implementation of the strategy.
What We Did:
Held Family Meetings
Began having family meetings to discuss the direction of the company. Before these meetings the direction of the company was implied but never formally discussed within the family.
Prepared a Strategic Plan
Prepared a formal strategic plan. Beginning with a brain dump of our knowledge and strategy from our heads onto paper. This provided a shareable document for the first time.
Began sharing company direction and performance outside of the family with employees through a quarterly letter. Don’t confuse sharing information with loss of control issues. Sharing is inviting participation not decision-making. That comes later.
Formed committees to involve more employees outside of the family in executing the strategic plan. We were never big on committees, feeling they were too bureaucratic and bogged down decision-making. We formed a Strategic Planning Committee, an Executive Committee, a Manager’s Meeting and an Operations Committee. After we formed them we found they were a powerful way to develop, implement, and communicate new ideas.
Began sharing detailed financial reporting to measure company performance. Sharing strategy outside of the family was new to us; sharing financial information was even bigger. We gradually included everyone. Beginning with more detailed financials for management and top level summarized information at the staff level. This built significant trust throughout the company.
Hired Non-Family Management
Hiring outside non-family management helped bring in some formal financial reporting and organizational structure. The challenge is finding people who have the right chemistry not just the right skills. We fumbled a few times, but when we got it right it was one of the most effective things we did to grow the business.
Worked with Advisors
We worked with outside consultants on special one-time projects, and to move projects forward faster than we could do on our own. They provided an outside perspective from a wide range of experience with different companies.
Formed an Advisory Board
We didn’t form an advisory board until after we brought in outside investors. The first advisory board was very ineffective. We had some outside investors, who as members, were only looking at quick, short-term strategies which would hurt the business long-term. Later we replaced them with members who were genuinely interested in a long-term, slower, more measured growth plan. They brought in very valuable ideas and experience. We always looked forward to these quarterly meetings, even wishing they were more frequent.
Bringing It All Together
Our roles change as the business grows. We become less hands-on and delegate more responsibility to others around us. As entrepreneurs, at first it can feel uncomfortable to share strategy and decision making with others. It can feel like a loss of control or diminished power. However, it’s actually more powerful when we get to the point where we realize inviting others into the process makes the company more successful (and enjoyable).
Takeaway – 10 Steps to Developing Your Team
- Family Meetings – Discuss general direction of the business and get family on same page
- Strategic Planning – Formalize planning process. Brain dump of information from head into writing
- Players – determine roles for family members, gauge interest level
- Strength of Family members – are they good leaders or just good managers
- Skill Gaps – identify skill gaps and how to close them
- Non-Family Managers – using outside talent to bridge skills gaps and experience levels
- Formation of Committees – sharing decision making outside the family
- Sharing Financials – sharing key financial information outside the family
- Outside Advisors/Consultants – to bring specific short-term skill sets and experience
- Advisory Board – Objective advice from others with no vested interest in the business