The Essential Qualities Every Family Business Needs To Survive
Few companies survive and flourish based on their good fortune alone. It’s a great shame that fewer than one third of family businesses make it as far as their third generation of leadership. Clearly, what sets the successful ones apart is not simply one single thing. So here, given my role as the Chairman of my family business, the Mohamed Hareb Al Otaiba Group, I would like to look at how one can go about building on the past to succeed in the future. Because every decision made today, is also part of the legacy that belongs to your company –and family– for years to come.
CONTINUING THE LEGACY
Generation on generation, the business grows, changes, and adapts. As CEOs age and have the will to step away from the daily management of the business, we must be ready to appoint new heirs. Yet, with each new leader, there should be a level of transformation of the company.
In fact, appointing new leadership can help not only revitalize strategy, but assist the company with future growth and profitability. As new CEOs take the helm of a company, the winds change. A younger leadership team brings with it a wealth of new knowledge and expertise. The question is the balance of respecting the past while still driving forward with new markets and meaningful ways to expand the business.
So, succession planning is something that should be front and center– it’s crucial we take the time to fully comprehend the impact of handing over the reins of any business empire.
INNOVATIVE IDEAS FOR THE COMMUNITY AND NATION
A truly successful and sustainable family business is much more than a mere commercial entity- it is an integral part of the country, region, and community. There are many ways a family company can help boost the quality of life for the nation as a whole, but few are as effective as offering innovations that may be currently lacking.
Bringing in known brands that deliver much-needed products or services to our region is something that benefits both the holding company in question, as well as the nation as a whole. Whether in transport, trading or technology– the right move in any of these sectors means a positive direct impact on the economy and wider community, and the progress of the nation.
Delivering new products and systems to a region will surely yield profitable results. Consumers will be willing to pay what’s sometimes called an “innovation premium” in exchange for goods that they cannot get elsewhere; meanwhile, in offering a unique service to the community, our businesses become essential to the nation and those who reside in it.
A SENSE OF FRUGALITY AND SACRIFICE
Family businesses have a unique quality in that every member of the family needs to play their role. There will inevitably be slowdownsthis is the very nature of a modern-day enterprise– but how we handle these periods is fundamental to our survival and ongoing success.
The rule here is that we must all be willing to make sacrifices in both our personal lives and in terms of our finances. Contrary to popular belief, it is the former that gains the most notable results, and it’s those business owners who make personal sacrifices for their companies that see better growth.
Understanding that the venture as a whole is bigger than any individual is the easiest way to put this into a greater context. Each family member must be willing to sacrifice their own desires or needs in order to further the progress of the business and ensure the security of the family in the coming years. It takes a noble leader to understand the gravity of their role in these terms.
CONSTANT REINVESTMENTS IN THE BUSINESS
Expanding on the above quality, sacrificing finances in the short-term may allow us to reinvest in the venture, thus allowing it to flourish in the long-term. Retaining some of the capital for this purpose will allow us to continuously develop the business and safeguard it against instability.
In theory, this process ought to be direct. However, it may bring challenges to a family business– especially if family members take money from the company for their own purposes. This action not only weakens the enterprise as a whole but can lead to a multitude of negative emotions –jealousy, greed, pride– all of which can have a further impact on your business.
AN AIM TO DIVERSIFY THE BUSINESS
To diversify is to enter new lines of business which stray from the current offering. This type of planning means that in times of economic downturn the finances and profits can be better protected. For this reason, we should have an aim to diversify our portfolio as a key element of our long-term family business strategy.
Clearly, diversifying can be a risky financial move– but it’s one that every businessperson must make if they hope to progress within their industry. Expanding a commercial portfolio only serves to create a stable platform– working across a myriad of sectors and industries creates a solid backdrop.
Each area in which you operate may be unique, but if they form a direct response to consumer needs in the UAE at large, you are doing your job. This diversification is not only across industry but also territory, expanding into other Emirates. Of course, to diversify successfully, we must understand the modern market.
AN URGE TO MOVE WITH THE TIDE OF TIME
Times change, and so must our businesses. To stay relevant in the ever-moving world, it’s absolutely essential that we understand emerging and declining industries. Should a sector begin to die off, we must be ready to adapt and bring something new to the market.
Keeping our fingers tightly on the pulse is crucial. While no one can predict what will happen, staying up to date with business trends, cycles, and patterns can inform our strategy. Searching out the various growth rates of sectors in the region is important. So, armed with this information, we may have the finest tools to ward off any threats that changing times may indeed bring our way.
VALUE AND RESPECT FOR EMPLOYEES
Loyalty is the core of any family business. This is a theme that needs to run throughout the company, not just among the family members. Hence, respecting and valuing our loyal employees is a worthy cause. These are the individuals who enable us to sustain the company– and without their ongoing support and service, we would face further challenges.
Rewarding the very professionals who aid us in our business functions can be as simple as giving back. In fact, those leaders who are more concerned about others (than themselves) ultimately gain the best results from their workforce. The lesson is that appreciating our team members ought to be at the heart of business ethos.
CREATING A MASTER PLAN AS WE GO FORWARD
The qualities we’ve examined here are not inherent in each family business, and yet may be implemented over time. As CEOs and leaders, it’s our duty to create a wider master plan for the future of our companies, so that it may continue for many centuries to come.
In some respects, having this foresight is perhaps one of the greatest and most valuable characteristics any businessperson may have. Regardless of the current standing of our ventures, we ought to be always looking to improve stability and sustainability– for both our companies and families.