After years of working with Senior Executives across the world it’s interesting to see the mistakes when appointing Senior Executives. There can be many reasons why, but one reason is not understanding the differences of working in a family Business and a Non-Family Business. I’ve recently met several Senior Executives who are unhappy with their employment because of this lack of knowledge and understanding and I’m meeting Business owners who didn’t realise there was a difference. These Business owners feel that money and title is enough and stick to the Mantra of “Surely experienced ‘C’ level Executives can work in any company? “
Due to the change of economy, I have become more involved with assisting Family businesses rather than just the corporates in finding ‘C’ level people do której jest otwarty najbliższy sklep spożywczy. To do this successfully I believe that everyone in the process of hiring Senior Executives must understand the differences that separate the two entities. Having worked for an English and Indian Family Business in a past life this has helped me at first hand to see the ups and downs of these Businesses; this with a theoretical base has helped with running my own companies or advising others with theirs.
One recent company I have been involved with was run and founded by a successful New Zealand Entrepreneur. He does not have anybody in his immediate family to hand the reins over to. He has tried (outside the family) executives to fill his ‘C’ level roles and has had three people in three years! What is the problem? Was this a real Family Business? Was the problem his, or the Executives?
We discussed the reasons for the failures but in terms of assisting the owner I got him to firstly look at where his people came from. All three had been ‘C’ level people in corporates and had done an excellent job in their corporate environment. They all returned to corporate life and continued to do well in their new roles. Why did they fail then in this successful company? It is not uncommon for small businesses with limited resources to be challenged at the thought of facing their bank manager to apply for business funding. The reason is simple; regardless of how long you have been with your bank, you will still have to comply with formalities when it comes to funding your business start-up or business growth. Fundamentally, you will be asked to write a business plan for funding which must be presented with your application form. You may wonder why you need to present a business plan to lenders or investors. Let’s think about why banks want you to prepare a business plan and then you will fully understand why investors ask for this precious document that will cost you some time and money to put together, but ultimately, if done well, will help you raise the much needed finance.
Banks are taking a risk on you and your business and they need to understand that risk and compare it against the expected reward from your business. Have you ever thought about how banks make their money for their shareholders? Well, they do so investing their capital (money – usually investors’ funds and borrowed funds) in your business with full expectations of earning higher returns than the costs they must pay for borrowing or raising their own capital. If you fail to deliver the returns on their investment from your business, they will end up being a victim of your problems which will cost them their business. In short, your risk of business failure becomes their risk too.
They want to gain a better understanding of your management team who will be responsible for managing the funds invested in your business. This is a concept many small businesses and start-ups, don’t grasp fully. They may think their business ideas or wonderful products are sufficient ingredients for business success. Nothing can be further from the truth. A business is an organisation of integrated functional activities designed to accomplish a desired objective. These integrated activities must be managed competently by different people inside or outside the organisation for successful results to be accomplished. The bank manager reviewing your application must be satisfied that your team possesses competencies both at the level of technical knowledge and correct attitude – the critical ingredients for success when present and vice versa. A business that is poorly managed will fail irrespective of the quality of its products and benefits offered to its target market. With this in mind, you must be aware that when you apply for funding from a bank (or any other types of funders), your management team’s quality will have to be judged based on past performance. They also want to know if your management team possesses industry, business and market knowledge. Of course, if you are a one man business, you need to ensure you put in place a team, virtual or physical that brings the balance of expertise critical to give assurance to the bank that your business will not expose them to unmeasured risks.