In this video, Eric Flamholtz introduces his framework to create a family business plan. Learn how establishing family values resolve family dynamic issues, and how establishing the mission and vision resolve strategic issues.
- So, we all know that any family business has issues. Family dynamics is strategic. If you want your family business to succeed, you've got to resolve those issues. But how? The family has to come to a set of agreements which I call a family business plan. The family business plan consists of values, mission, and vision. Specifically, the values address how to resolve the family dynamics issues, and the mission and vision resolve the strategic issues. Now the terms values, mission, and vision are commonly used in strategic planning, however, they have special meanings in the context of a family business.
The values are how the family proposes to behave towards its own members and nonmembers. Getting the values right is critical to the ongoing success of the family business. For example, family members will not receive any special compensation just because they're family members. The mission is the stated purpose of the business for the family. For example, the purpose might be to provide employment for all family members. The vision is what the family wants to achieve with the business in the future for the family.
For example, the vision might be to sell the family business so all family members can retire comfortably. The failure of a family to agree on its values, mission, and vision can lead to ongoing conflict in the business and in the family itself. For example, let's say my wife and I have different concepts of the vision of our family business. I'd be happy to continue to develop it for the rest of my life, while she would like to sell the business and retire. If we can't come to an agreement for the vision of our company, then Houston, we have a big problem.
So you can see the importance of coming to an agreement on the mission, vision, and values. Agreement across all three is ideal, but even agreement on one or two of three is better than no agreement at all.
- Recognize the two kinds of family business issues.
- Define values in terms of a family business.
- Identify the six key areas of family dynamics.
- Summarize how to manage a business when the business leader and the family leader is not the same person.
- Recall the steps for creating values for a family business.
- Examine the importance of family business plan objectives.