It’s a huge subject but well worth reviewing, given many of the 27 million private businesses would be regarded as family businesses. Over the coming weeks we will take a look at many subjects dear to the hearts of family business owners, including specific challenges they face and hopefully some practical solutions they can deploy in their businesses.

The first topic addressed in this post – How do you align shareholder objectives and corporate objectives?

Corporate Objectives: This can be a particularly thorny issue in family businesses, due to the wide array of ages and experience within the family who are involved in the business. But really it’s no different from any other business, in the sense that every management team needs a strategic plan for their business. A leader has to set a path that will scale the company with predictable results, with control and alignment of resources and perhaps surprisingly we would say with safety in mind. That’s what has to come first, what’s the best path for the business?

Once that is laid out, both at a strategic level and as an operational plan, with specific operational policies and financial forecasts, then we can turn our attention to the family shareholder objectives.

Shareholder Objectives: This is always a delicate discussion but an absolutely essential one to have. Let the CEO (probably a family member but not necessarily) along with a trusted advisor hold one on one chats with the key family shareholders.

Establish clarity over personal objectives. Use this checklist to cover the bases, depending on age, circumstances, roles, health, some of these will not be relevant:

  1. What’s your career plan and how can the business help fulfill those objectives?
  2. Are there any compelling personal events arising in the next 3 to 5 years that inform what you want to do in the business?
  3. Are you happy that the company remains independent?
  4. Do you expect or desire a cash event to crystalize your wealth in the business?
  5. Are you happy with the direction of the company and the strategic plan?
  6. Do you see any conflict between the company’s objectives and your personal objectives?

Answers to these questions will allow you to formulate, both personal and corporate solutions that makes sense. For example after the one to one conversations, it’s common for the strategic plan to be tweaked to reconcile the reality of family members’ objectives.

By reconciling these personal shareholder objectives with the corporate strategy on a regular basis, you avoid huge disappointment and mutual mystification between shareholders, management and all employees. This alignment will bring a new level of energy, passion and commitment that will engulf all stakeholders, driving them towards a common goal.

Future posts will review more detailed questions assuming the objectives have been agreed. These will include:

  • How do you groom family members to take on more responsibility?
  • How do family members value their businesses?
  • Why do family businesses fail to exit, to achieve a cash event?
  • When is it time for a founder to step aside?
  • How can trusted advisors help family members?