Improving Your Luck
A quick aside before I begin – while this article is written from the perspective of family businesses, there’s much here that applies to all small businesses. I encourage you to read on – family business or not…
We’ve all seen the statistics. Two-thirds of family businesses fail between the first and second generation. Another 50% of those that remain don’t make it on to generation three. While you and I have never met, I’m going to go out on a limb here and guess that, as you lead your organization, failure is not one of your long-term goals.
To help increase your chances of success, let’s spend some time today talking about the secrets of the organizations that succeed. Are there secrets, you may ask (and, if so, am I allow to share them with you)? Maybe it’s nothing but luck. Chance… Fate… Destiny… Karma… Kismet… Serendipity… (aren’t online thesauruses a wonderful thing?)
Good news! It’s really not a secret and it’s not about luck. While there are definitely situations out of your control that can impact your business – economic downturns, health problems, natural disasters, werewolves (just threw that in to see if you’re paying attention) – there’re many things that you can do to increase your chances of success today and improve the likelihood that your organization will be one of the “fortunate few” for whom that success is sustainable into the future.
1 – Plan
Many small family-run companies “fly by the seat of their pants.” I’m sure this isn’t true of your organization but, some of those other organizations don’t do much (or anything, if we’re being brutally honest) in the way of planning. Strategic planning. Nah. Succession planning. Nope, not that either. They’re busy taking care of clients/customers and developing new business. There’s no time for planning.
This is a problem. To be successful, you must make time for planning. Planning and being deliberate about how you run your business – today and in the future – has a lot to do with whether (or not) you will be around tomorrow. Let’s talk about two critical types of planning.
Strategic planning – Work with your team to define and document your goals and your strategy for achieving those goals. Define your strengths, weaknesses, opportunities, and risks. Have an annual plan, a 3-year plan and a 5-year plan. Make this an annual process and regularly check in to see how you’re progressing. Adjust, if you need to, as you go along.
Succession planning – Be proactive about succession planning. Who will take your place? Start at least 5 – 10 years before you intend to exit or begin winding down. If you’re already into that 5 to 10-year window, start now. Select the right person (based on experience, knowledge, skills and attributes, not just bloodline) and begin grooming that individual for the role. While your plan may be to have one of your children step into your spot, realize that genetics doesn’t automatically translate into ability for (or even interest in) the role. One of the quickest ways to run a business into the ground is to have the wrong person at the helm.
2 – Train
Train your employees. Train your successor. Train yourself (more on that later).
Employees – Make sure you invest in employee training. On-the-job training. Management training. Technical training. Hard skills and soft skills. As business owners, often we invest a lot in technology. We need current hardware and software to compete and work efficiently. Sometimes, unfortunately, we forget to invest in training. Technology is only as good as the way that your people use it and your people are only as good as the training that has been provided to them.
Successor and Family Member Employees – If your plan is to have a younger generation family member take over, or even just work in, the organization, chances are they have grown up in, or around, the business. Give serious consideration to having them work somewhere else for a while. Maybe it’s a summer job while they’re in school. Maybe it’s two years working for another company (yes, another company) after graduation. However you do it, there’s much to be gained. First, you can ensure that they’re working for the organization because they want to be there, not just because it is an easy place to get a job. Additionally, he or she experiences first-hand what it is like to be a non-family member employee and understands the expectations a non-related employer has. He or she also broadens their perspective and sees how things are done in other companies – valuable information and perspective that they can share, if and when they decide to come back “inside.”
It’s also advisable that family members are expected to learn the business from the ground up. Don’t allow a family member to step into a role that they aren’t qualified for simply because they are related to you. As we discussed earlier, it’s qualifications not bloodline that should be considered when placing someone in a position. Have the same standards for family members as you do for non-family members and allow them to truly earn their way into higher positions within the organization. And this goes beyond hire or promotion – manage their performance as you would do for a non-related employee as well.
3 – Don’t get stuck doing things “the way they have always been done”
What worked ten years ago, will not work today. What works today, probably will not work in 5 years, 10 years, or 20 years. Be willing to change. Accept input. Stay up to date on changes and trends in the industry. Be open to new ideas and new approaches. Ask for opinions and listen to different perspectives. Makes changes as you go along, and your organization will stay relevant and competitive.
4 – Don’t do everything yourself
We’ve all heard the saying “if you want something done right, do it yourself.” This approach to running a business is one of the quickest ways to ensure that the business will fold when you’re no longer there (it’s not great for your mental or physical health either)! Be willing to let go and turn things over to others. Let’s change the saying to something like this “if you want something done right:
- assign the task to someone else,
- provide them with the tools and training needed for success,
- give them the opportunity to struggle a bit and even possibly fail the first time around,
- provide feedback, guidance, and additional training to help them learn how to do it right.”
It’s not as catchy as the original saying but, trust me, it’s much more successful in the long run.
5 – Be intentional about separating family and business
Your family – You see them at work. You see them at home. You see them during the week and also on the weekends. Vacations – yup. Holidays – double yup. In order to ensure your own sanity and the sanity of those you love (yes, even though you never get away from them, you still love them), you need to be deliberate about separating work and home. Make rules and stick to them. No matter how tempting it is to discuss that new client over the dinner table, don’t. Those conversations can truly wait until you are together again – at work.
6 – Assess and improve (train) yourself
What kind of leader are you? Are you an “old school” leader or a “new school” one? (if “new school” isn’t a thing, it is now.) Old school leaders believe in tough love. A kick in the rump when something goes wrong and praise, ummm, never.
This form of leadership isn’t successful today (and I’m not sure it ever was). New school leaders focus on building teams, communicating vision, assisting employees with learning and growth. They’re empathetic and ask employees “what can I do for you” rather than “what can you do for me.” (Ask not what your employees can do for you, ask what you can do for your employees.)
If this isn’t the style of leadership you are comfortable with (and even if it is), invest in leadership training for yourself. No matter how long you have been doing your job, you still have things to learn. Improve yourself – improve your organization.
7 – Have the right people in the right roles
While I’ve touched on this several times earlier in this article, it’s important enough to discuss on its own. When you hire employees from the “outside” (as in, outside your family), you interview them, assess their background, skills, education, work ethic, and so on. You want to make sure that they will be successful in the job for which you are hiring them. The same is true of family members – don’t slot a family member into a role “just because” they are related. If you think it’s difficult telling your sister-in-law that you do not have a job for her <lazy, good-for-nothing> son, think how much harder it will be to tell her someday if you have to fire him.
8 – Understand and respect generational (and other) differences
Baby boomers, Millennials, Gen X, Gen Z. Ensure that you have a clear understanding of the differences and don’t think of one generation as “right” and all others as “wrong.” It’s important to know what motivates and energizes your employees. It’s also important to understand that for different generations “hard at work” can look different. You may be used to thinking that work can only happen when you’re in the office. Other generations may be comfortable and adept at working from a multitude of locations – the office, the home office, the soccer field, the coffee shop. We all know people who are in the office from sun up to sun down and don’t accomplish a doggone thing. Manage for results, not presence.
It’s also important to realize that not everyone fits into stereotypes. Not all Baby Boomers are technologically challenged. Not all Millennials are “entitled.” Not all Gen X’s are cynics and not all Gen Z employees are risk averse. People are people. Know the trends but get to know your people and manage each one as the individual they are.
Over 50% of the United States GNP is generated by family businesses. They’re the lifeblood of our economic structure. Unfortunately, they don’t tend to be long-lived. If you combine your passion for your business, your knowledge of the industry, your commitment to your clients, and savvy financial planning with the strategies we have talked about today, the likelihood that your organization will be thriving once you have left the helm just got a whole lot better. And, for the record, a little bit of luck does not hurt either!