It’s important to develop an owner’s mindset. A few weeks ago, the Harvard Business Review had a good article on What Makes a Family Business Last. Many of the clients who come to my office who are starting a business are starting a family business. These business owners are often looking for long-term growth and to pass the business on to family members down the road. When we work on their corporate agreements, their loyalty and dedication to their families are the common themes woven through their corporate structure. Some other features of a family business according to the HBR,
- Take a long-term view of investments and relationships;
- Stay in ownership control to do things their own way;
- Focus on persistent improvement and innovation;
- Develop loyal stakeholder relationships;
- Build key talent in select individuals;
- Carry lower debt; and
- Build greater financial stability.
One of the keys to long term success? Developing an owner’s mindset. The owner’s mindset description,
An Owner’s Mindset recognizes the importance of operational excellence, but insists on being in activities that create value (financial, social, relational, and reputational) according to the key values of the owners.
Those with an Owner’s Mindset ask: Where are we creating value? Where should we invest our financial and human capital? How do we develop leaders and organizations with the right culture?
Your legal documents should keep these things in mind. The legal structure of your company shouldn’t work against the values and goals of your family business.
Developing an Owner’s Mindset
John A. Davis has some good ideas for how to cultivate the owner’s mindset:
- Develop family and company missions that focus on creating various kinds of value (financial, social, relational, and reputational), and doing this according to your key values;
- Design activities (an onwers’ council, board meetings, conferences, meetings with experts) to gain a high-level view of firm and family assets, as well as changes in the size and nature of the family and its activities;
- Develop an integrated plan for the family and its enterprise over time;
- Develop family and non-family talen to support value creation (and unity building);
- Move thoughtfully into new growth opportunities that have a good chance to grow the value of the company by learning to experiment;
- Challenge business and other activities that destroy value but remain due to old attachments, a sense of tradition, or conflict avoidance;
- Detach (more quickly than you are comfortable doing) from businesses, investments, practices, and people that aren’t adding value.
The best time to develop this mindset is when you are forming your business. However, some people may have inherited their family business. In that case, running the company may be a totally new role for you. However you choose to approach your business, your mindset will have more of an impact that you probably anticipate.
If part of your new family business strategy includes reviewing the legal structure of the business, call my office to set up a Legal Strategy Session and we can review the best options for you – (877) AMAYERS.