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Are You Truly a "Family of Entrepreneurs"? Does It Matter?

  • 28 October 2015
  • Author: Cari Holbrook
  • Number of views: 3664
Are You Truly a "Family of Entrepreneurs"?  Does It Matter?

Visionary, risk taker, charismatic. These characteristics likely come to mind when describing an entrepreneur. But not everyone who goes into business for themselves is a typical entrepreneur, especially when it comes to starting a family business.

Oftentimes, family members go into business together because their personalities seem to complement each other. The dreamer is matched up with his realistic sister. The conservative father holds the purse strings for the fearless son. There can be risks in “dragging someone into the business” who doesn’t possess a typical entrepreneurial spirit. Differences can often turn into conflict, but there can also be rewards. Here are three traits that are often misunderstood—and mismanaged—as great assets for building a family business. 

The thinker

Entrepreneurs are typically people who are willing to fail fast. They have their eye on the prize, with little concern over potential obstacles. While this is important, the visionaries that so many associate with entrepreneurship often need to be paired up with someone who is concerned with details.

Harvard Business Review reports that individuals fail to follow through on commitments 50 percent of the time. Even when we want to do something, we know we should do it, and we really truly intend to do it, half the time we just don’t get it done. Researchers have pinpointed a gap between knowing what you want to do, and actually executing that vision. How does this relate to entrepreneurship? Simply talking about what you want to do – with employees and/or business partners - won’t help you accomplish it. The thinker can offer a roadmap that can take the entrepreneur’s vision and build actionable steps to help make it a reality.

The money manager

Every entrepreneur must face the reality of abandoning a steady paycheck and sacrificing personal capital, at least in the beginning. But it’s critical to have a plan in place and resources available like savings, capital funding and a potential line of credit that will get the business thriving with its own cash flow as soon as possible.

Previously we shared an important statistic with you: One-third of failed startups simply ran out of money. Putting a family member who is notoriously frugal in charge of your money may seem like a simple answer. But it’s not necessarily the right one. Your money manager should stand firm on responsible spending but he or she must also know when and where to take necessary risks.

As Garrett Gunderson, author of Killing Sacred Cows, explains, “Every dollar that you create and protect as bottom line profit is much more valuable to your business and to you as an owner than the revenue dollar you create at the top. Can you streamline processes? Save on inventory? Save on taxes?”

Outside accounting, tax planning and business plan advisors can help lay the financial foundation, but having leadership in place within the company with a knack for money management is critical to keep the business growing and thriving.

The legacy planner

Nearly three out of every four family businesses do not have a documented and robust succession plan in place for senior roles, according to the latest PwC U.S. Family Business Survey. The survey also indicates that two out of every five family business owners will find it difficult to hand over control fully to their successors, and 56 percent believe they will stay involved in their companies longer than is optimum. Moreover, nearly half of next-generation family members working in the business view succession as becoming more difficult because of the growing age gap between the current leadership and those in line to take over.

For more on the importance of having a legacy planner within the business, read our blog post “Family Succession Planning: Four Careful Consideration” featuring advice from business consultant John Dini.

What entrepreneurial personality do you possess? Do you have the right combination in place to make your family business succeed?

Image Copyright:   shutter999 / 123RF Stock Photo




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