In any typical working day, I am constantly meeting different family businesses. I like hearing the challenges they face. Over time I developed a well trained ear to distinguish between cause and effect of what they are speaking to me about. I can see how much help they need and I meticulously jot down notes of all the key aspects they tell me as I try to join the dots.

This is why when meeting a new family business I always choose to go meet them at their offices and to meet them in person. I want to see the environment they work in, which communicates so much about the culture within the family business and I want to see the non-verbals they use when they are speaking to me.

Following the meeting, I send a detailed proposal, outlining the areas they would best work upon and how I can help them address them. This is where things get stuck. Sometimes it is because someone within the family business gets hesitant of sharing further information with an outsider. Many times it is because they feel that the cost linked with the assistance I can provide, is seen as an extra cost and hence something they could do without. This is normally due to a lack of appreciation of how much value is being destroyed as the issues they talked to me about remain unaddressed. Many times they also fail to distinguish between the cause and symptoms. Some even come back trying to negotiate a cheaper fee.

What I always find mind boggling in those circumstances when family businesses avail themselves of my services, is that while they where dillydallying on whether to take up my services or negotiating a cheaper fee, the family business was constantly destroying value due to the following:-

• Lack of proper corporate governance, where the family business lacks structures and a mindset, whereby decisions are not taken within a framework of checks and balances
• Lack of updated info, with many family businesses not having timely management accounts and data on key KPIs, which could serve as a good basis to take decisions upon. In such instances family businesses have little or no clarity on key aspects like debtor levels, creditor levels, cashflow situation and margins & profitability.
• Lack of planning at all levels, from strategic planning to see how the family business can remain ahead of the change happening around it and how it can gain competitive advantage, to succession planning.
• Lack of a solid organisation structure, whereby reporting lines are not clear and the performance level required from each employee is not linked with the overall strategic objectives of the family business
• An overall organisational culture that has a sense of helplessness and confusion.

It is a common occurrence that family businesses have all of the above issues, which are constantly destroying value and in many instances they do not even know how much value is being destroyed. This is where I get the usual mind boggling sensation – why have family businesses dillydallied so much on getting the necessary assistance? It would be like my house is drowning in water due to a burst pipe and I am wasting time dillydallying on whether I should be getting a plumber to fix it or worse still if I stay haggling with the plumber to reduce his fee, while my house is being destroyed by the water leak.

So my appeal for family businesses is to focus on how they can stop destroying value rather than the cost of any professional help they can get. The value they would be destroying is surely much higher than the cost of any professional assistance.

The  Business Reality Check, a holistic service offered by EMCS, is specifically designed to help family businesses overcome the issues mentioned above. Click HERE to review what the Business Reality Check is made of.

Feel free to contact me on silvan.mifsud@emcs.com.mt to ask any questions.