The family, the business, and the brand

Successful family businesses are built upon values that reflect the character of the owners and become the cornerstone of their branding strategy. These efforts translate into years of goodwill and loyalty with customers, suppliers, distributors, community members, etc. The brand equity becomes a powerful tool in creating a long-term opportunity for growth and prosperity.

There comes a time in any family business for the owner to pass the torch of brand management to the next generation. However, the unpleasant fact is that only about a third of family businesses survive into the second generation of the family. This means that it is vitally important to find the right family member to lead the company onwards and continue to manage the brand strategy.

Sometimes, the second generation would much rather not work in the company, but rather build a career elsewhere. In the event that there is no likely candidate in the second generation with the maturity or capability to take over, it may be best to find someone from outside the family to take over the brand management - either temporarily or permanently.

Here are some tips on how to make the transition as smooth as possible, to preserve the value of the company's brand.

1. Clearly Communicate the Brand Strategy

Although it sounds basic, our experience in advising many family-owned businesses is that there is often a failure to communicate the importance of the brand and its impact on how the company is run. The founder may just assume that the children will want nothing other than to follow in the parental footsteps and run the company with the same attention and dedication to the values that have made them successful. The children may not share those values and may choose to implement their own style into the company without realizing the repercussion of their decisions. This is especially detrimental when they feel themselves dragged unwillingly into a business in which they have little interest.

Compounding this is the fact that many company founders tend to be strong-willed individuals, much better at giving orders than they are at listening to viewpoints. The result - the children get thrust, against their will, into the management role. If they perform poorly, the company declines in brand value. That is why it is imperative that the founder and the rest of the family work on developing open lines of communication, not just at baton-handing-over time, but also throughout life.

2. Consider the Options

Armed with a good understanding of each others' motives, family members are in position to evaluate their alternatives. In the absence of a good internal candidate, the company may need to recruit from outside the family. Options include promoting an existing non-family employee or outsider who shows a good understanding of the business and the importance of the brand.

Another consideration to be made is around whether the person should play a transitional role, to help build the skills of the next generation, or to take over a permanent role in brand management. This might be the start of a move to separate the brand management of the company from its ownership, so that while it remains at least largely family-owned, family participation in branding efforts grows less.

It is important to have contingency plans - if the external hire does not work out, what's the fall-back?

3. Clarify Objectives

If you hire someone from outside, we find it is highly important to clarify objectives - such as the length of the expected employment. Specify clearly the expectations around the role, such as anything about whether the job description includes bringing a younger family member up to speed to eventually take over the leadership role.

Specify your expectations around results, which might include sales benchmarks, operational standards, product research and development. The candidate will, likewise, have expectations - such as around marketing strategies, employee training, and possibly an ability to introduce sub-brands.

Be sure to have these issues set down in writing, agreed to and signed by both sides, before starting an employment situation.

4. Invest in Professional Advise

Often, entrepreneurial companies are energetic environments in which the emphasis is on actions and results. Sometimes, this means that other important aspects of the business, such as documentation, take less priority. Often, important information such as customer likes and dislikes, procedures and plans are locked up in one place - the founder's mind. It may be important to "formalize" the business through accurate accounts and other records.

For this, professional help may be able to add value.

We find that in many cases, an outside professional advisor can also help the family work through the options, asking the "uncomfortable" but necessary questions that family members may not want to raise. In this, appropriate use of outside professionals can be an important success factor in helping a family business thrive beyond the founder's involvement.

For more information regarding brand marketing and communication design strategies or to arrange a complimentary initial consultation, please contact Nicholas Di Pietro: 905.850.9994

ARTICLE HIGHLIGHTS