Tag Archives: professionalizing

01/31/20

Professionalizing The Family Business

Professionalizing a business means to change its model from owner-centric to management-centric. A business dependent upon the owner’s presence to generate revenue and profit undergoes a metamorphosis into one which operates according to established systems and processes. Responsibilities to keep these systems on track are delegated to staff experts. This model allows the owner to focus on what they do best; that which brings about the most progress. Fast-food restaurants are commonly cited examples of business systemization. Staff members are trained to run the business and produce a consistent product.

In an owner-centric business nearly everything revolves around one individual. The problem with this model is that we all have the same 24 hours a day and the 7 days a week in which to get our work done. As the business grows, so grows the work load. Ultimately it becomes too large to be successfully managed by a single individual. After reaching this point, continuing as an owner-centric business results in stagnated growth or owner burn-out, or both.

Understanding the significance of creating systems and processes is a necessary step in undertaking professionalization. Such operations, when in place, enable the business to respond quickly and appropriately to the swift changes in today’s business environment.

Young family businesses—first and second generation—may typically struggle with professionalization, just as any young non-family business might. One may think, however, that a 125-year-old family enterprise will have long ago accomplished professionalization. This is not always the case. Myriad factors influencing business activities today may leave next-generation leaders behind. What worked to bring the business into the twenty-first century may not be what’s needed to continue into the twenty-second.

For all business types on the brink of the professionalism metamorphosis, things get complicated. For family businesses it’s even more complicated. They are built on an interacting three-part structure: the business, the family and the ownership. Clearly the business system needs to be professionalized. But the family system needs to undergo professionalization as well. I will address this in upcoming newsletters.

02/11/17

Saved The Business—The Only Problem Is…

We all know the story of the surgeon reporting the operation went well; the only problem—the patient died.

Some thirty years ago family businesses became a subject of investigations, and advisors rushed to help them. Their initial thinking: because it is inherent in the nature of family-owned enterprises that leadership is by family members, the businesses lacked the necessary acumen and skills to be successful. Consequently, they focused on establishing procedures, protocols and practices that helped the businesses prosper. The only problem—the family died.

Since then emphasis on helping family businesses has shifted focus—and importantly so—onto family needs and goals, with expertise coming from a wide range of areas including psychology, family counseling, family systems, estate planning, mediation, conflict management, career development, substance abuse, wealth management and leadership development.

My own experience though, in providing life support for early-generation family businesses and their families, has revealed that many need to learn the importance of professionalizing the business and understand how to implement professionalization if they want to be successful across generations.

Professionalization is the process of moving a business from an owner-centric to a management-centric entity—one in which the business operates from established processes rather than requiring its leadership to provide daily supervision. Achieving this goal allows leadership to focus on the necessary entrepreneurial roles of business development, client cultivation and long-term planning for both the family and the business.