Businesses go through a life cycle, much like humans. They are born, grow, mature and eventually decline. A family-owned enterprise has the added complexity of generational dynamics.
The first generation is characterized by the entrepreneurship and drive that led to the founding of the business. Later generations have the temptation to coast since the business is already built. This coasting can further exacerbate business decline. Taking performance and profits for granted is dangerous.
If your goal is to preserve the business for future generations, then reinvigorate it now, while you have the resources to invest. Revitalization is a process that includes honest evaluation and decisive decision-making.
While no one likes to face the thought that their business may be in jeopardy, think of the process as positive. At the least you’re preforming preventative maintenance and discovering new opportunities.
Assess your performance – Compare the last three to five years of financials to your present performance with an eye to growth (or decline), profits and trends.
Where is the business expanding and where is it softening? Stagnation – level performance year over year – is a clue that the business is getting ready to enter the decline phase.
Examine your industry – It’s a rare business indeed that isn’t affected by global trends. Even if your services are provided locally, changes in business practices impact your company.
For example, transactions in one of the lowest-tech industries, lodging, are increasingly handled online. An inn without a web site is often at a disadvantage in reaching customers.
Where are the bright spots in your industry – the innovation, the cutting-edge marketing, the start-up activity? That’s where to look for inspiration for your company.
For business-to-business sales, looking at trends in your customers’ industries is important. How well are those companies doing, and how are changes in those industries impacting their purchases from you? The global market has meant more choice for many. How can you retain your competitive advantage and customer loyalty?
Evaluate management capacity – In addition to second generation complacency, family businesses can also suffer from leadership reluctant to relinquish control.
What is the situation in your business? Have successors been empowered to bring ideas and innovations to the table? Is the business making the best use of current technology, or are operations behind the curve in that regard?
Recognizing that you have taken your company as far as you are able is difficult, and many company founders struggle with delegation. However, a refusal to realize and mitigate your own weaknesses puts the company at risk.
If the organization is suffering from a lack of entrepreneurial ability and talent, consider bringing on someone specifically in that role. That person can explore options and develop feasibility studies and business plans for new product or service ideas. This internal research and development function can provide the information and impetus to revitalize your company.
As a stable, successful company, you have many advantages over the risky start-up stage. Leverage them with your savvy and hard-won knowledge to ensure your business survives well into the future.
If your business received a PPP loan, you may be eligible to have that loan forgiven. Our team can help you ensure that your loan forgiveness application is filed correctly and timely. Complete our five-question form, and we can provide a quote for your application by the next business day.Request a Quote