3 Tips for Running a Successful Family Business
Tuesday, August 31, 2021
Managing a family business can be difficult. Around 70% of family-owned businesses fail or are sold before the second generation is able to take over the operation. However, if the right steps are implemented, a family business can grow and flourish into a hugely successful entity.
Running a family business is a unique opportunity that only a few people are fortunate enough to experience in their lifetime. However, it isn’t an easy task either. From the conflicts of interests to the limitation of new ideas, family-owned ventures face many challenges.
EHL Alumna, Huilin Quek, recently shared her experience of working in a family-owned venture. In an interview with Deon Senturk, CEO of the leadership school CLIMB by Talent Plus, she shares 3 key tips to running a successful family business.
1. Require Outside Experience
The first key element to running a successful family business is to require all family members to obtain business experience outside the company. Why?
As Judy Lin Walsh, principal at BanyanGlobal wrote in the Harvard Business Review:
"By establishing yourself first outside the family business, you will have demonstrated to your family, to your future colleagues, and, most importantly, to yourself, that you have something real to offer your family's business"
Working first outside the family business also ensures that getting involved is what the family member wants to do. For Huilin, for example, being in a family business was never what she initially wanted to do. “Being in a family business was definitely not something that was on my mind. It wasn't something that I wanted to do,” she explained. She wanted to study theater and pursue an acting career until she took on her first job.
“Those few months of working in the hospitality industry at that level was just unbelievable. It just opened my eyes to so many things and there were so many aspects about the hospitality side that I enjoyed.” Her father eventually convinced Huilin that "the hospitality industry really isn't that much different to theater. It's about connecting with your audience. It's about setting the stage because that's what we are here for".
Huilin eventually went on to study at EHL and afterwards worked as an intern at the Ritz-Carlton before later joining the family business. Today she runs the venture as CEO of Q-Industries. However, it’s her experience that Huilin credits for kindling her passion and giving her the courage to step up and take the lead in the family business today.
2. Seek Outside Advice
One of the challenges family businesses face is that ideas and development can be stifled by family relationships. Moreover, it can be difficult to separate work and family life. This is why the second key aspect to a successful family business is seeking outside advice.
Outside advice can help the development of family members in the business. “Looking outside the family for mentorship is important,” explained Huilin. “Because my parents will first and foremost always be my parents. They will always look at me not as someone that's working in the company, but as their daughter.”
The issue with seeking advice from family members in a business is their bias. This bias can often transform into self-doubt. This was the case for Huilin. “There were a lot of things going through my head about, did I do well? Are the clients saying what I want to hear because I’m the boss’s daughter, or are they agreeing with me because of who I am in the family business?”
Therefore, outside advice must provide an unbiased opinion. This ensures the advice is not affected by family dynamics. “Looking outwards beyond my parents and talking to people outside the business helped a lot in terms of the self-doubt about whether I am capable enough,” said Huilin. External facilitators can also help bring fresh ideas and a clear strategy to the business. As Saul Plener and Bill McLean from PwC Canada explained:
"Involving a third-party facilitator to support the planning and put in place a tailored strategy, with the right tools and systems relevant to the business, will allow the family to keep a strong foundation and hold itself accountable going forward."
3. Instill family values into everything
Whilst family-owned businesses face many challenges, they also have plenty of benefits. One of their competitive advantages is that they can instill their family values into the operations. This is what the third key element to a successful family business is about.
As Russ Alan Prince writes in Forbes: "The value of the family is often instrumental in creating a strong sense of identity for family businesses. These values are regularly foundational to running family firms."
These values can include trust, emphasis on long-term commitments, and maintaining good relationships. The important part is that everyone is treated with the same value, whether they’re family, colleagues, or even clients.
This has been the key to success for Q-Industries as well. “[My parent’s] value system is very strong [...] And their value system cherishes relationships. So that was instilled into the business. We've been so personal with our clients and with our vendors and our suppliers,” explained Huilin.
“I think the relationship aspect is the pivotal point for us, and it's the shared-value system that we have about building relationships that have transcended, and it's very strong for us today,” she added.
In her interview with CLIMB by Talent Plus, EHL alumna Huilin Quek revealed the three tips above to overcome certain challenges in family businesses. These include requiring outside experience from all family members, seeking advice from outside the family circles, and thirdly making everyone feel like family.
Published at: https://hospitalityinsights.ehl.edu/running-successful-family-business