It is frightening and disappointing to see that only 30% of family businesses make it past the first generation! We love working with family businesses, their work ethic, focus on quality and caring for their customers is fantastic. However, we see the potential pitfalls that they all face when discussing how to take their businesses to the next level. The most forward thinking are those that embrace building partnerships with external forces and especially non executive or independent directors.
Living and breathing a business both inside work and in the family environment can be suffocating and perhaps not the healthiest route to long-term success and prosperity. Putting up barriers to external leaders who could add significant value and instead pushing ill equipped family members into roles that they are highly likely to fail in or, even worse, don't actually want to be in will only lead to stress, anxiety, probable failure and financial disaster.
We have seen these two different approaches close up and embracing external leaders wins every time!
While family businesses offer substantial economic and social benefits at the local, national and even global level, many face significant challenges planning for leadership succession. With founders and leaders often reluctant to relinquish control of the business and subsequent generations unable or unwilling to assume responsibility, the transfer of power becomes contentious. As a result, businesses are exposed to cracks and wounds, threatening their brands, their longevity, and ultimately, their legacy. By onboarding independent directors, companies insure against these challenges, and owners are able to focus on their vision and goals for the business, as well as plan for appropriate leadership succession in a more objective and methodical manner. Independent board members further professionalize the business by increasing trust and accountability, and bring fresh ideas and best practices based on outside experience.