Transforming Your Business From A Family Business To A Corporation

The INSEAD Business School reports that family businesses constitute a whopping 60 percent of global employment and 70 percent of global GDP. Indeed, experts recognize family businesses as a crucial driver of both global growth and international trade. Overall, it seems that the global economy stands tall on the shoulders of family enterprises.

However, we can't take family businesses for granted. We can't merely assume, since they have been around for decades, all family enterprises will be here tomorrow -- and the day after. Such businesses (just like all others) have many issues that require resolution.

Let's explore some of the issues that need to be tackled before a family business can transform into a corporation.

Appreciate technology

Make no mistake about it -- a successful business mogul must utilize digital resources. You can undoubtedly reap excellent benefits by adopting digital technology, as you need it to upgrade and promote your business. Experts note most family businesses are often conservative with digital and innovative technology spending.

As a remedy, formulate a strategy that integrates digital technology as an indispensable part of your business. For one thing, doing this will considerably reinforce your company's ability to deal with cyberattacks and data breach issues.

Develop various strategies

You must have a clear strategy and vision for your business. Companies that understand the available growth paths, profitability avenues, efficiency building and a robust planning strategy will command the first-mover advantage. To make this possible, you have to understand your business' core functions and benchmark this against the dynamic market trends.

Try to identify things that can sustain your business, grow it and make it survive. Next, create short- and long-term budgets for company upgrades, which means investing in innovation, profitability and efficiency. Use a period of investment planning and business strategy.

In all this, focus on your supply chain, financial management, manufacturing process and sales and marketing. Doing this can be the secret trigger for your company's growth. Above all, stay well-informed on current business trends. Focus on aspects that affect your business directly or indirectly.

Plan for succession

Anyone running a family business knows you must deal with operational pressure while managing the expectations of family members who are likely to become substantial shareholders. Such situations engender rifts arising from a lack of communication between the current owners and the next generation. Ownership and succession is a crucial sticking point in many family-owned businesses.

Keep in mind that conflict resolution, ownership structure and succession planning are essentially interrelated. Deal with three crucial elements of succession management -- the new generation's entry, the retirement of current management and a viable conflict resolution mechanism. The entry approval for a new family member should depend on one key factor: the business' available space. Of course, the availability of such a space directly depends on the current business success.

Always select the most competent family members to run the business - the issues of age, bloodline and gender have no place in this selection. The potential successor should be exposed to an external environment to keep up with market pressures and rival businesses before giving them a new business role. Furthermore, plan for retirees' post succession roles; find out whether they can mentor your business managers or take up an advisory role (for instance, a non-executive chairman).

Conclusion

Without a doubt, family-owned businesses are the backbone of the modern global industry. Significantly, many well-known and respected companies first started as family enterprises. Past and recent history graphically demonstrate that well-run family businesses can thrive and scale the heights to achieve successful, reputable corporation status.

To attain corporation status, have a clear, well-drawn succession strategy in place and appreciate digital resources' crucial role. When you combine these with long-term planning and other effective practices, a family business can flourish as it transforms into a corporation.