10 Oct Six Strategies to Future Proof Your Family Business
Did you know that by 2026, Fortune 500 companies – the iconic list of largest companies in the U.S. by revenue – are projected to maintain their status for an average of only 14 years? That duration is less than half what it was 50 years ago. Competition, consumer preferences, shorter product cycles, and global economic factors all have contributed to a changed environment in which even the biggest companies rise and fall.
The shifting landscape for these companies highlights broader trends that are especially meaningful for family enterprises, the vast majority of which say they want to perpetuate the business for at least another generation.
To “future proof” a business means to take strategic actions to ensure that the business stays relevant and competitive in the face of future changes. For family businesses, there are additional complexities related to the interactions between three systems: Business, Family and Ownership. For a family enterprise, creating a robust and sustainable business means navigating the tensions that arise from this “three circle” model.
- Innovation and Tradition: Embracing technological advances and other change to remain competitive while honoring traditional values and practices that define the family business history and legacy.
- Long-Term Health and Short-Term Focus: Balancing the need for long-term sustainability and generational continuity with the need to address short-term financial and operational challenges.
- Family Interests and Business Interests: Balancing family harmony and shared values with profitability, growth, and competitiveness.
- Ownership and Management: Distinguishing between family members who have ownership rights in the business and those who are actively involved in its management and decision-making.
- Professionalization and Family Culture: Striking a balance between adopting ever more sophisticated business practices while maintaining the unique family culture that defines the business.
- Succession Planning and Autonomy: Balancing the need for a well-structured and transparent succession plan with the desire of the current generation to maintain control over the business.
Addressing these tensions and finding equilibrium between seemingly conflicting choices is essential for family businesses to “future-proof” themselves. Continuity and longevity require the ability to adapt, innovate, and evolve while preserving the values, culture, and legacy that make family businesses unique.