advisory boards

3 Habits of Highly Successful Family Businesses – #1 Advisory Boards

Why is it that so few family businesses make it into future generations?

Often the earlier generation in a family business rides a wave of success and everything in the business and family runs smoothly. Like a sports team, when the team is in first place the clubhouse issues are smoothed over, but when the team falls into last place, frustration builds and negativity takes over the team. In an established family business, the issues develop when either the success of the business slows down or the next generation is entering the family business. Everything just gets more difficult towards the end of the first generation’s run.

There are three things that family businesses use to maintain success and smooth the transition into the next generation:

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Selecting Advisory Board Members – How Important is Family Business Experience?

Textbook theory will advise you to resolve your family issues before forming an advisory board. It’s most commonly referred to as “keeping the family baggage out of the business.” Ideally this should happen, but in real-life it rarely does.

Experience shows us that family issues usually spill into the business and this is just part of being a family business. You should diminish these personal issues as much as possible, but don’t expect to eliminate them entirely.

Ideally we would like to keep advisory boards free of these issues. In reality many of the family issues are intertwined in the business and are the cause for many of the obstacles in implementing new initiatives and strategy. Even though the major topics will focus on non-family issues, inevitably you will discover that family issues will creep in often as hidden issues. Many advisory boards are setup because the family has difficulty communicating, reaching consensus, and afraid of hurting each other’s feelings.

Understanding that we need to deal with some of these family issues with the advisory board will influence the makeup and chemistry of the advisory board members.

Importance of Family Business Experience

In addition to selecting members who can bring some new skill or experience to the board, also consider bringing in members who may belong to other family businesses. Even though family issues will be a minor topic, it helps to have members with some background in family business to better relate and be more patient with the family.

Choosing board members with some family business experience can help.