3 Qualities Of A Peak Performing Family Business
By Kyle Danner
Some family businesses succeed. Others, not so much.
It’s a frustrating reality, especially considering how passionate each family is about their business and how badly they want to create a legacy for the next generation. Unfortunately, it’s something that still rings true today. According to the Family Business Institute, only 30% of family-owned business make it to the second generation. From there, the numbers get even smaller. About 12% survive into the third generation—and only 3% to the fourth or beyond.
I come in contact with a number of family businesses as an advisor. Through my experience, I found 3 qualities that separate the truly exceptional ones from those just getting by. On the surface, those qualities seem pretty obvious, maybe even overly simple. However, they’re crucial for building a peak performing family business.
Below, I’ll outline what these three qualities are, as well as how you can put them into action in your family business so you can beat the 30% statistic.
Trust is the cornerstone of any high functioning work team. The same applies to any family business. Without trust, families cannot create a culture in the business or family where sound decisions are made or people are able to work together productively. It just won’t happen—no matter how hard you try to keep family and business separate, or how much you tell yourself, “it’s not personal; it’s business.”
I’ve written before how trust erodes in the family business. But how do you build trust in the first place? Start with your actions. Trust is the concrete manifestation of what you say you’re going to do, and it’s how you judge whether someone can be trusted. Do they do what they say?
A simple tactic is to think about the next person in line when you’re working on a project. If you consistently hand off your work thoughtfully and with consideration, people will come to see you as someone who is reliable. Someone who can be trusted. If you have a hard time passing along work, they might feel like you don’t trust their capabilities.
The other way to build trust leads us to the second quality of a peak performing family business...
Clarity requires intention and attention. A peak performing family business knows where they’re going and how they’re going to get there. They created a vision for the family and the business. They defined their values that guide their decision-making. They established processes for communication and problem-solving.
Understanding your family’s purpose creates that clarity at a high-level. The 3 questions here are a great way to start a positive, productive conversation about your family’s purpose. From there, you can create a vision, set your values, and build processes to reinforce both on an ongoing basis.
Finally, peak performing families take a big-picture approach to appreciating the contributions of others. That appreciation isn’t just limited to family members and whether or not they’re active in the business. That appreciation extends to employees, customers and other stakeholders including their community. It even extends to the past (realizing the contributions of predecessors) and to the future (working to preserve a legacy of the next generation).
Need Help Creating A Clear Vision For Your Business?
Building a peak performing family business is an ongoing process. However, with a foundation built on trust and clarity of direction with an appreciation for everyone involved, the effort is significantly easier and more rewarding.
Before any of that can happen, however, you need to have a clear, concise vision for your family business. This is much easier said than done. In many businesses, everyone has an idea of the direction the business is headed, but these ideas are rarely the same. The idea of a vivid vision is to get everyone on the same page so everyone moves in the same direction.
As an EOS Implementor, I help family businesses craft an easy-to-understand, actionable vision statement. You can then use this vision to build clarity in your business and create a Peak Performing Family Team!
Ready to learn more? Schedule a free meeting today, and let’s talk through your vision together.