As an advisor, I help families of all shapes and sizes answer some of life’s biggest financial questions. Many of the clients I work with are involved in a family business. Some are founders, some are next generation leaders, some are actively working in their business, and some are retired. Though each family and business is unique, there is something that all family businesses have in common: They face a series of unique challenges throughout their life cycle, from startup, to growth phase, to maturity, to exit strategy.
For many family businesses, the lack of clear succession plans is the most significant challenge. Some 43% of family businesses surveyed by consulting firm, PwC, in 2016, did not have formal succession plans in place.1 Much is written about what a family business owner can do to defy that trend and put a workable plan in place; Amazon sells 757 books on this topic. But relatively little is written about what PwC calls, “the missing middle,” the gaping strategic hole between startup and succession planning.
It’s natural for family businesses to focus on the key question of who will run the business when the founder or current leader retires or exits. It’s more difficult for family businesses to answer the broad, open-ended strategic question of, “What do we want the family enterprise to look like in ten years?” According to PwC, what many family businesses lack is precisely that, a strategic plan “that links where the business is now to the long-term and where it could be.”
As an advisor, I want to help the business owner families I serve find their own “missing middle,” and that begins with asking the right questions. Understanding our clients’ unique motivations and values is key to understanding what characteristics they want their business to embody. In life and in business, I want to understand what “winning” looks like to them. Successful handoffs of the business, caring for family, taking care of employees, and bettering the local community, are top priorities for many of the clients I serve.
If you’re a business owner and want to explore the “missing middle” for your company, ask yourself if there is a peer firm or competitor that you particularly admire and why. Maybe it is their ability to develop new and innovative products or reach new sales markets. Maybe it is their ability to attract and retain talent or care for their employees. Your answer may hint at some longer-term strategic hopes for your company and provide a great starting point for further consideration.
Are you a business owner ready to take on the “missing middle” for your family enterprise? Connect with us today.
1https://www.pwc.com/sg/en/entrepreneurial-and-private-clients/assets/family-business-survey-2016/family-business-survey2016.pdf