The term “Family business ” usually refers to a small or mid-sized company that has a local focus and is plagued with a familiar set of dilemmas such as succession. In spite of that very simple description, family businesses have played a powerful role in the world economy and have included, through the years, big businesses worldwide. Some examples in Australia of successful family businesses are linFox, smorgon group, cooper’s brewery and there are plenty of others.
Most of the time, the key to success of a family business lies in its unique ownership structure that allows them to plan and thrive in the long-term. But other researchers believe that it is also this structure that causes many of them to fall. So what’s really the case?
In a recent article from Harvard Business Review, What You Can Learn from Family Business by Kachaner, Stalk and Bloch, presented a rigorous analysis of how family businesses and non-family controlled businesses differ in management and performance.
And from this article, we’ve derived seven points on how family-run businesses manage for resiliency and how business managers can benefit from these principles.
1.Family business is frugal in good and bad times.
In most cases, family businesses view their money as “the family’s money” which is why they often do a better job of keeping expenses under control. This can be a weakness as often, to save a buck, they invest with shorter timeframes in mind rather than thinking of the long term.
2.a family business keeps their bar high for cAPEX.
Family-run firms have a simple rule when it comes to capital expenditures – they make sure they do not spend more than they earn. They often run “leaner” than their corporate cousins.
3.a family business has little debt.
Family businesses, because of their close-knit and simple structure usually associate debt with fragility and risk, and tend to avoid it. They usually have very strong balance sheets.
4.Family business make few and small acquisitions.
Although an acquisition can transform a company and pay large rewards, it can carry a high risk. And this is why family businesses shy away from large acquisitions and prefer to make few of these deals and only favor companies that are close to the core of their existing businesses.
5.a family business is diversified.
In this day and age, diversification is important to keep a business alive and it is no different with a family-run business. Diversification has become one of the key ways to protect family wealth. In fact, the Smorgon Group in Australia is an example of a diversified family business that went from meat to steel, and paper.
6.a family business is more international.
Contrary to what most people know, family businesses are ambitious about expanding overseas. In fact, they often generate more sales out of the country (USA) than other businesses do.
7.a family business is better at keeping talent.
Businesses that are family-owned prefer to extol the benefits of longer employee tenures thus creating a stronger culture.
With these seven points, we can conclude that despite its small and simple structure, family businesses have shown to be resilient in times of economic uncertainty. I think this is largely driven by a strong sense of ownership of the brand and finances. Yes, they are not without pitfalls, the largest being inter-generational transfer but they survive through the years by focusing more on resilience than performance.
The flipside of “success” is “failure” and it’s the latter that every business owner and manager strive hard to avoid. By definition, the term “business failure” refers to the cessation of a company’s operations following its inability to generate enough revenue to cover expenses without adequate reserves.
In the recent times, there are many examples of strong businesses that have failed to adjust to the changing markets and economic times or to take advantage of opportunities – and this has ultimately led to their downfall.
Based on my 26 years experience working closely with business owners, here are my 9 key tips to avoiding business failure:
1. always ensure that you target your marketing.
Too many businesses have an undifferentiated product/service offering and fail to understand who their target customer is and what they require. Don’t be undifferentiated, make sure you’re speaking the right language and using the right channels and/or media in targeting your main group of consumers. Focus on delivering exceptional value. ACTION:Develop a structured Marketing Plan for your business and revise it regularly.
2. always plan ahead.
Talk about what you want to do next and where you’d want your business to go by preparing strategies that will help you focus on your business goals and objectives and to make sure that appropriate and sufficient resources are in place. Be rigorous in your planning and hold yourself and your Team accountable. ACTION:Develop a 5-year Strategic Plan supported by Annual Plans. Have 90 Days Actions. Cascade your plans so that everyone in your business is part of a plan.
3. have great business models.
It is a fact that most businesses fail because of poor business models – a business model describes you will engage your target market to profitably generate revenue. To avoid this, make sure that you have great and well-thought pricing models and economic cost models that will help your business focus more on creating, delivering and capturing value needed by your customers. ACTION:Understand your Business Model – there are some great tools to do this.
4. have effective processes.
All businesses are driven by processes. However, few businesses have well documented processes. Many businesses fail to have any continuous improvement processes and have a well entrenched view that they are already efficient. The reality is far from this and many businesses can improve productivity by up to 30%. The challenge is to avoid waste in: time, resources, opportunities, materials, etc. caused by inefficiency – this results in higher than necessary costs and lower margins. ACTION:Apply simple Process Improvement Tools, like 7 Wastes to your business on a regular basis. Never stop searching for improvement.
5. engage your team.
As a leader, you should be a good example to your team. Teach them how to own issues, take responsibility, be accountable and model proper engagement, not only with their customers and clients, but also with each other. An effective team will overcome most business obstacles and enable your business to seize opportunity, when required. ACTION:Engage your Team by improving communication and feedback.
6. have great sales processes.
Sales is the engine that drives your business. Most businesses that fail do not have effective sales processes in place. So with that said, make sure you have great processes that your salespeople can follow. ACTION:Clearly define your Sales Pipeline and develop a Sales Model that delivers.
7. ensure you have adequate cash buffers.
“Cash is fact – Profit is opinion!” This great quote from Andrew Russo (Master Accountant) gets straight to the heart of the matter. Ensure you build adequate cash reserves in your business to ride out changing markets and economic conditions. Cash reserves also allow you fantastic flexibility when looking at opportunities. ACTION:Develop a plan for how you can build cash reserves in your business. Engage your Coach or Accountant in this process.
8. avoide uncontrolled growth.
Uncontrolled growth is often a pre-cursor to business failure. When business growth is “out of control” often cash flow is uncontrolled. Rising sales are barely enough to cover rising costs and cash is at a premium. Cash flow, staff, customers and production are all stretched often to breaking point. Avoid this by “taking your foot off the accelerator” – be more discerning in taking on clients – engage strategies that will slow demand (like lift your prices) – say “No” to opportunities that aren’t in your sweetspot – and introduce tighter financial controls and KPI’s. ACTION:Monitor key drivers in your business and ensure that you have the capability to meet demand. Develop strategies to maintain control.
9. take early action.
Too many businesses fail to “take effective action” until it is too late. Act early and avoid the Receivers! Set up effective monitoring systems. Plan for different scenarios (revenue, cost. Market conditions, competition, etc) and define “trigger points” – bank balance, sales$, profit %, market KPIs, etc – that will cause you to evaluate your options well in advance. These options should include plans for how you will address the challenge – reduce staff numbers, cut costs, close non-performing divisions/products, etc. Make these decisions now rather than trying to make them when under pressure. aCTION:Develop plans to address particular scenarios with effective trigger points.
Focus on ensuring that you have all 9 elements covered and you will do more than stave off failure you will be on the road to success.
What is the element that has the highest priority for you? Pick one and start working on it now.
Wonder when you’d get the best results with your marketing strategies? Wonder no more – with a new insight by Simon Sinek called The Golden Circle, you are sure to inspire your consumers and persuade them to make the action you’ve been expecting from them.
But before we expand on the idea of The Golden Circle, here’s a brief background on Simon Sinek. One of the TED Talk speakers, Simon is also known as the author of the book “Start With Why” which was released in 2009. With his works, he has been convincing and motivating people to do what inspires them.
With that said, there is no doubt that this new insight from him will help you get the results you have been dreaming of from your marketing strategies.
The Golden Circle Concept
As its name implies, the concept known as the Golden Circle is made up of 3 circles. The innermost circle is labeled as the WHY, the inner circle as the HOW and the outer circle as the WHAT. These 3 circles represent the 3 things that every company or organisation have in order to exist.
The WHAT circle refers to a company’s objective – what they want to achieve, the HOW circle represents a company’s resources as well as processes that are necessary to achieve their objective, while the WHY circle refers to a company’s purpose – why they exist. Most people perceive profit as a company’s purpose and this is incorrect – it is a result not a purpose.
To further understand how the Golden Circle works, let’s use the same example Simon used in the TED video.
Apple has been around for many years but while it is just like any other computer company, they stand out. What makes them stand out? And what makes people trust them so much that they are willing to buy computers, HDTVs and even MP3 players from them?
The answer can be seen here – Apple, just like some well-known achievers in this world – Martin Luther King and the Wright Brothers, operate in contrast to how the majority of the world’s population operate.
Most people, leaders and companies usually give more importance to the WHAT aspect of their business. They tend to emphasize on their products, their objectives without even stating WHY they sell what they sell, build what they build or do what they do.
If Apple were to operate just like everybody else, a marketing message from them would sound like this:
We make great computers. They’re beautifully-designed, simple to use and user-friendly. Want to buy one?
This kind of marketing pitch is common but uninspiring. And most of the time with this kind of message, companies don’t receive the right response from their customers because they fail to inspire action.
Now, since Apple operates in contrast to the usual uninspiring way, their marketing message sounds like this:
Everything we do, we believe in challenging the status quo, we believe in thinking differently. The way we challenge the status quo is by making our products beautifully-designed, simple to use and user friendly. We just happen to make great computers, want to buy one?
By reversing the order of information and giving emphasis to WHY they do what they do, Apple inspires their customers and everyone else to make the right action based on their message.
This example proves that if you’re looking for amazing results from your marketing strategies, you have to let people understand WHY you do what you do because people who believe your cause will make it their own and do something about it.
So if you’re looking for the best way to inspire action from your customers and get best results, follow The Golden Circle concept.
In Simon’s words
“the goal is not to do business with anybody who needs what you have. But to do business with people who believe what you believe. Because when you talk about what you believe, you will attract those that believe in what you believe and therefore, inspire action.”
The process of searching for a VA for your business is fairly easy (it worked well for me!) and is similar to recruiting an assistant locally. The only difference is that 100% of the process is done online – tests or surveys are conducted electronically and candidates are interviewed via VOIP services like Skype.
My Personal Hiring Experience
I found my VA via www.OnlineJobs.ph, an outsourcing website that offers foreign employers to post job openings and search among thousands of Filipino applicants for the perfect person to fill the post.
For sites like these, you will need to register yourself as an employer before you can post a job offer and get access to thousands of resumes in their database.
After registering and posting your offer, you can either wait for applicants to contact you and send in their resumes (via your contact email) or go through thousands of resumes yourself. I received at least 50 or more emails when I was searching for a VA.
As for my hiring process, the basic structure was:
1. Develop a Role Profile or Job Description – be clear on the qualities you are looking for. I was keen on finding someone with great English writing skills and I culled applicants very heavily on their written responses.
2. Advertise on www.OnlineJobs.ph or similar sites such as www.Freelancer.com, www.VWorker.com, www.Odesk.com
3. Have some simple criteria to sort through applicants on the first pass. Use templates – one for “Thanks but no thanks,” the other for “Congratulations the next step is…” This step reduced applicants from 50 to 20 for me.
4. Get people to demonstrate their abilities with some simple tests. I asked the remaining 20 applicants to do some tasks for me – transcribe my handwriting into one of my templates, read a newspaper article and write me a short blog from it, and provide me examples of their previous work. This step reduced applicants from 20 to 10, with 3 exceptional prospects.
5.Conduct a Skype interview with the Final 3. My current VA, Rai, was actually my top choice, and after the interview I knew she was the one I wanted to hire and so I didn’t bother to interview the other 2.
6. Prepare and have your selected VA sign a Confidentiality Agreement, then you’re good to go.
If you think my process is too much to handle – don’t fret! There are other ways to find and hire a Virtual Assistant.
You can actually work with a virtual staff agency to outsource the process of finding an outsourced worker.
Two sites that provide such services are www.virtualstafffinder.com and www.prialto.com where you are automatically paired with a qualified VA that best meets your needs.
Having a VA works well for me, just like I said in my previous blog and I highly recommend it to any business owner who needs assistance with work-related stuff. So if you think you could use a little help right now, go online, register in one or two outsourcing sites or virtual staff agencies and find yourself a credible, hardworking Virtual Assistant that will ultimately make work become a little easier.
If your business requires you to be on the road most of the time and/or you find yourself needing assistance to get secretarial and administrative things done then a Virtual Assistant (VA) is what you need.
Why a VA?
In this day and age where everything is mobile, having a VA fits the bill perfectly. Compared to having a traditional locally-based administrative assistant, VAs are often more economical (I can attest to that!) You also save on office space and equipment expenses as you don’t have to provide for it, except of course, if your business requires output from custom software.
Now you don’t have to go overseas to find a VA. There are a number of people in Australia who offer a range of VA services. I found this site http://www.virtualassistantaustralia.net.au with a Google Search. There will be similar services in other countries (if not – now there’s a quick business idea!)
However, I have found my VA – Rai, who hails from the Philippines, to be better skilled and have more initiative than some, not all, of the local Support Staff I have used in the last few years and that is where the real value is added.
The additional benefits of having a full time Assistant, when previously I could only realistically afford casual help, are myriad. I am always finding new ways for Rai to help me in my business.
I use Rai for general business support and article writing but I know of others who have hired VA’s with detailed technical skills & knowledge e.g. Web design, SEO and social media. The choice is yours as there a plenty of options.
But the benefits aren’t one-sided. In fact, a VA saves a lot of time and money too by working as a VA.
Benefits of Being a VA (from Rai’s point of view)
From a VA’s point of view, being employed as a virtual assistant is more beneficial than being employed locally (and I say this from experience).
Before working online, I was a Sales Agent and had to spend way more than 8 hours to finish my day’s work. When I added extra work time and commuting I barely had time for other things and I sacrificed a lot of extra time – time that was supposedly for my young kids (I have 2 and am a single mom). I got stressed a lot and realized it wasn’t worth it since the pay didn’t get any higher. So eventually, I quit that job.
In my search for other opportunities, I stumbled upon the site that changed my life (www.onlinejobs.ph) I was eager to look for a well-paid, full-time job that I could do at home so I could be there for my kids every day. I found what I needed by being a VA – I found my life balance. I am paid well, save time and money by working at home – cutting transportation and other unnecessary costs.
Pitfalls of Hiring a VA
Hiring and working with a remote assistant who is a million miles away is not at all perfect. In fact, sooner or later you are bound to encounter a few pitfalls in this kind of working relationship. But don’t get dismayed, with proper communication you and your VA can find solutions and work around these pitfalls.
The most common pitfall English-speaking employers experience with a VA is the language barrier. Most VA applicants from outsourcing sites are based in countries where English isn’t the first language. Therefore, it is crucial for you to screen your candidates with their English speaking and writing abilities if you want the best VA and a smooth working relationship.
This is one of the great benefits of hiring a VA from the Philippines as they all speak excellent colloquial English – this makes communication a breeze.
The next one is Forex Rate. Since you and your VA aren’t from the same countries, expect that you don’t have the same currency. As the employer, know the equivalent of your currency in your VA’s location and negotiate a win-win deal. Consider and include money transfer and currency conversion fees (especially if you’re using PayPal) when calculating pay for your VA as these cost can be quite high and cut into the net wages for your VA.
Another drawback is time difference. Lucky for Rai and I, we only have a time gap of 3 hours so communication delays aren’t a big issue. But for those with greater time difference (8 hours or more) be sure to list tasks ahead of time so your VA will have things to do while your offline or having a good night’s rest. Then you can just check results in the morning.
Using online tools like BasecampHQ, online CRMs and Google Docs can really assist in communication with your VA. They allow for better collaboration than sending docs backwards and forwards through email. I also use Camtasia to make short instructional videos (published in private on my YouTube Channel) to provide better quality instructions on more complex issues in less time than writing an instructional email.
Other issues that may come up are holidays, electricity and internet connection issues. Be considerate and open-minded as these things happen. Ask about national non-working holidays and observe them. Also whenever necessary and imminent, your VA will need some time off to take care of personal issues (e.g. sickness, family matter).
Overall, encourage transparency so you and your VA can work around any issue that may come up.
Russell –Having a VA works well for me so I highly recommend it to any business owner who needs assistance with work-related stuff. I certainly couldn’t get through my current workload without Rai’s support.
Rai – Being a VA works for me because I can work from home with no commuting and extra costs. Russell gives me the freedom to manage my day and this gives me flexibility as well as a good wage. It’s a win-win!
You know, I think that over the last few decades that “business” has lost the art of managing their people. (I say “business” because obviously there are some great managers out there – but, in general, management is a lost art!)
We’ve managed to pull through the GFC (“Global Financial Crisis”) and have emerged into a market that is very competitive, with tighter margins and that is far more globalised than ever before.
There are also significant opportunities for businesses that are have the capacity and capability to embrace them. But here lies the challenge…
I am finding that most businesses do not have the necessary “middle- management” skills and personnel to pull it off.
Why is this so?
Well, in an effort to become more efficient, we have “exised the fat” and removed layers of middle-management by pushing more and more responsibility down the “chain of command”.
“Delegation and empowerment” have been the buzz words of the first decade of this century. Now, this was fine when economies and businesses grew at unprecedented rates and that being an effective sales person meant that you were quickest to the fax to collect new orders when they came through.
In the 1980’s and 1990’s, high profile CEO’s (“Chainsaw” Al Dunlap, etal) made a big impact with their “razor gangs” laying off hundreds of thousands of people, mainly middle managers, in the search for improved profits.
I believe this was short-term thinking and that the long-term effects were camouflaged by the huge economic growth from the late 1990’s to 2008.
“Money can paper over a lot of cracks” has been my mantra and since 2008, when the cash vanished, the cracks have been laid bare.
My colleague, Mike Boyle – the Sales Scientist (Mike is a leading sales consultant and if you’re having any issues with sales in your business – you need to contact him at www.banjargroup.com.au ) – has found similar issues in Sales Management and has expressed it beautifully.
Mike says “If managers are seen as by managing by results, they are actually managing by fear.
If they are seen as managing by activities, they are managing by pressure.
Neither of these management strategies will grow the capabilities of the team to meet future challenges.
They should be placing a large proportion of their time in developing and coaching their sales team to lift skills, improve knowledge and change behaviors” and he has the data to prove that this works.
I agree wholeheartedly with Mike. In essence, we have lost the art of coaching and mentoring our team members.
We are often very good at measuring the numbers and “cracking the whip” on activities but not very good at coaching our team to build skills, knowledge and change behaviours.
I believe it will be exacerbated in our changing workforce, as the “experience” of the Baby Boomers leaves the workforce and is replaced by the “enthusiasm” of Gen Y who have not been coached and developed to the same extent.
For me, this raises a couple of fundamental questions:
What are your managers doing to “grow” their people?
How will you move from a management culture based on fear and pressure to one based on mentoring and growth?
Your answers will be critical to your long term business success.
