Family businesses are said to be able to pursue longer-term objectives and strategies compared to other corporations because they don’t need to be so strongly oriented towards short-term profitability targets. They tend to have longer-serving employees and often feel a special social obligation towards their workforce, especially in times of crisis. Their equity ratio is also often higher than in equivalent corporations. All of these factors can form tangible competitive advantages. However, the emphasis here is clearly on “can”.
Advantages and risks compared to other corporations
Family businesses need to be able to use these potential advantages skilfully. They don’t just happen automatically. And what’s more, as always in life, there is a flip side to the coin. A high equity ratio, for example, is not an advantage per se. Firstly, because equity is quite an expensive way of financing companies, at least from the point of view of conventional business economics; and secondly, because family businesses often have natural limits when it comes to raising capital in the free market. Family shareholders, for quite understandable reasons, typically do not want to see their shares watered down in such a process.
Generational change as a special risk
Furthermore, the potential benefits mentioned above are also coupled with specific risks. One of the biggest challenges faced by a family business is the generational change of shareholders and possibly even the management of the company if it is owner managed.. As a worst-case scenario, this can pose an existential threat.
For this reason, just as in the company itself, long-term and systematic personnel development is necessary among the shareholders. However, I prefer the term ” personality development” here.
I offer to act as a neutral party in supporting and facilitating the process of identifying and developing potential leaders. Almost 20 years’ experience in the commercial management of family businesses, alongside a number of projects in which I worked as a consultant to owner-managed companies have afforded me a wealth of experience in this area.
My coaching and mediation skills enable me to moderate delicate processes, especially in multi-generational companies (possibly with different family lines ), with the necessary tact and empathy.
I look forward to hearing from you and please allow me to assure you that you can absolutely rely on my discretion!