Every business team has heard the ominous line, “When you stop growing you start dying,” which is credited to beatnik writer William S. Burroughs and has, across the years, morphed into innumerable similar phrases, all used to emphasize the importance of forward momentum and progress to a company’s health.
While family businesses are typically not beholden to a board populated by voting investors or the whims of the stock exchange, steady, smart growth is essential to pass a thriving business on to its next generation of family leadership.
Your business does not want to become part of the 70% of family-run companies that never get handed off to the next generation. (entrepreneur.com)
Change can be difficult but it is imperative to keep learning, adapting and executing new ways of operating and generating new business from both new and existing customers. In essence, an openness to staying flexible, open-minded and agile underpins most long-lasting family businesses that have sustained success.
Business families that are successful couple an emphasis on growth and agility with the execution of the long-term strategic plan that deftly manages succession issues, financial management and other legal and tax-related challenges.
Let’s take a look at these two important focus areas for family-run businesses, growth and long-term planning.
Growth Strategies for Business Families
Family businesses that operate with an intent to grow are more likely to enjoy sustained success than those that do not. A business family with an intent to grow will have a formal marketing program, sales-enablement programs, tracking tools and other technologies deployed to generate leads, create new business from existing customers, track results and adjust their business development strategy accordingly.
Word-of-mouth lead generation and sales are great. They are the bread and butter lead sources for many small and mid-size local businesses. According to a survey by Ogilvy Cannes, 74% of consumers identify word of mouth as a key influencer in their purchasing decision.
What happens, though, when your word-of-mouth lead generation starts to run dry? What if you’re ready to take your business from respected, local pillar of the community to a regional or coastal player in your industry? What if you’re no longer the only player in your market space and serious competition is popping up all around you?
Here’s the painful truth: At certain stages of a business’s life cycle, overreliance on word-of-mouth generated leads and sales becomes risky. In other words, family-owned businesses that succeed don’t rely passively on their reputation and word of mouth to spark growth.
Business sources driven by word of mouth and reputation are incredibly important and powerful. But, like most things in life, a balanced approach is usually most effective. Here are some family business growth strategies that your family business can deploy as it seeks to market and generate sales with greater intent and formality.
Engage in Thought Leadership and Public Speaking
Injecting yourself into the seminar, conference and advisory board circuit can greatly benefit sales success. Speaking publicly about your expertise, product or service offering with a focus on solving problems positions you as a trusted expert.
The most important thing to remember when speaking to groups is this: Don’t sell. So, resist the urge to “always be closing” by simply offering a helping hand.
This is not a sales presentation. You are there to help possible prospects alleviate a pain point, educate them on a topic and deliver value. This approach builds trust and positions you and your company as a resource to answer more questions and solve more problems in the future.
55% of respondents in an Edelman-LinkedIn survey indicated that they use thought leadership to vet organizations they may hire and “almost 60% of business decision makers said that thought leadership directly led to their awarding of business to an organization.”
Re-engage with Your Local Chamber of Commerce
Like every business in your area, you joined the Chamber because you’re supposed to do this, and (initially) you attended Chamber events and business card exchanges. Once you became somewhat established, your participation decreased and today you don’t participate at all. Get re-engaged ASAP.
This is a low-cost, consistent opportunity to network and get in front of people that could become new clients or referral sources. If you’re an owner, select a member of your staff with people skills to shadow you and then hand this task off to them. While Chamber activities are a small step away from word-of-mouth marketing, it’s a step nonetheless and worth the time to re-engage.
Start an Advisory Board
Every business has an area of expertise. Leverage this expertise to create a group or panel that meets regularly to solve problems. This could also be called establishing a “think tank.” This is an outstanding, low-cost method for establishing thought leadership while networking with other organizations that can help you generate new business. Once established, you can take the advisory board on tour to amplify your brand positioning and expand your influence.
According to a recent blog by Finance, “A 2014 Canadian study by the Business Development Bank of Canada (BDC) polled over 1,000 small and medium-sized enterprises (SMEs) to reveal that only 6% of SMEs have access to an advisory board, yet 80% indicated that they’d set up an advisory board again. The BDC also conducted a 10-year study from 2001 to 2011, finding that annual sales of businesses with advisory boards (307 observations) were 24% higher than those of the control group (300 observations). Productivity was also 18% higher for those with advisory boards.”
Develop Valuable Content
Write a blog for your company; guest blog for another organization; secure an interview with a prominent industry publication or hire a ghostwriter to write and pitch the story. Develop and consistently post videos to your YouTube channel; use Twitter and other social media outlets to pulse out updates, news and other content marketing pieces to stay in front of your customers and develop new ones.
Attaching your name and brand to content that delivers value, advice and solutions to pressing prospect pain points is another path to improved lead generation and sales.
Focusing your content on specific phases of the buyer’s journey rather than on pushing products, services and why your company is great will be highly productive long term.
You will need to have patience, which is tough when deadlines and sales goals loom on the horizon. According to content marketing giant HubSpot, “Content marketing gets three times more leads than paid search advertising.” (Content Marketing Institute, 2017)
However, if you keep consistent with your content marketing efforts, even if they are small at the beginning, your family business will eventually see strong results. With intent and consistency, a content marketing strategy can be a great growth engine for family businesses.
Embrace Social Selling
Use social media as a way to amplify your expertise, helpfulness and value to the right audiences. Social media usage is about more than posting once a month or sharing your company’s most recent press release.
Selling via social media can be dynamic and highly productive if you focus on the right strategy. Engaging existing customers in a helpful manner, commenting on and sharing articles that could help a potential customer and showcasing your thought leadership can become invaluable lead generation and sales assets.
As cited by HubSpot, industry analyst Rebecca Lieb offered this in the Demand Gen 2018 B2B Buyer Survey Report: "Any salesperson worth their salt will be proactive: answering questions on social media, sharing thought leadership, and just generally being a helpful, sympathetic and proactive listener and sharer. This creates a channel of communication as well as accessibility. These skills aren't nice to have, they're must-haves.”
Build a Help-Driven Email Campaign
Develop and execute a targeted email campaign built around helpfulness and delivering value with no strings attached (at first). Work with your marketing team to curate existing content and/or develop new content that will resonate with your various market segments. Then, launch a strategic email campaign that offers solutions and tips for free.
There’s a time for every type of offer. Provide ungated (no personal information share required) content at first. As the prospect continues to engage, and moves deeper into the buying process, offer more valuable and sophisticated content, eventually making the ask for an email.
If your campaign is working, by the time they offer an email you’ve already established a relationship and some level of trust, transforming what was once a dreaded cold call into phone call that feels right for the prospect and the sales representative.
Adopt New Tech Like Artificial Intelligence (AI)
The disruptive force of artificial intelligence (AI), in particular, is fundamentally changing the way we live, work and operate businesses of all types and sizes. These changes are disrupting big industries and corporations in ways that have yet to fully play out. The Fourth Industrial Revolution is also changing the way smaller, family-owned and -operated companies interact with their market and audiences.
Leveraging AI, even on a smaller scale, can help automate back office, hiring and customer service tasks and free up valuable time that can be put toward innovation and higher-level , higher-value tasks. Using AI to automate and engage will improve innovation, ensure better talent acquisition and vastly improve the customer experience, all of which are integral elements for sustainable growth.
Long-Term Planning Strategies for Business Families
We all know that lead generation and resulting sales and revenue are big parts of the equation when it comes to passing a healthy family business on to its next generation of stewards. However, bigger picture, longer-term planning for critical issues like succession planning and financial and tax planning is very important to family business survival.
Just 18 percent of family businesses say they have a robust succession plan.
Family-run companies that survive across generations embrace long-term, intentional, and strategic succession planning. At these companies, choosing the next company leader is so critical to future success that it merits deep, thoughtful, and, yes, perpetual planning. Succession is a process at long-lived family businesses, and it is a process that never ends.
Strong succession planning at family businesses that have sustained longevity means:
- Establishing a formal succession planning process
- Assigning responsibility and accountability for succession planning to a specific team
- Understanding that succession is a long-term, perpetual process that requires steady, consistent work
“The most important goal in running the family business is to hand over the business. You don’t own it. You’re just watching it, guarding it, nurturing it, to hand it over to the next generation in as good a condition as possible,” stated George Riedel, owner of Riedel Glas. (EY Family Business Yearbook, 2014.)
Process is key to avoid poor succession choices and to eliminate the perception among non-family employees that the next leader is only getting the position because of family connections. Non-family talent must have confidence that the established succession process will produce a competent, well-trained leader, who also happens to be a family member.
Financial and Tax Considerations
Family businesses are complex entities just like public companies, just usually on a smaller scale. There are finance and tax benefits that apply to business families of which your CPA should be aware and implementing for you.
Again, intent and foresight are keys to successfully managing financial, tax and succession planning across multiple generations of family business leaders. The time to start planning is not three years before you plan on stepping down or selling the business; financial and tax planning is extremely complicated and takes time. Ten years or more out from stepping back or retirement is a much better window in which to get things right for the next generation.
Here are some important items to consider, most of which would require an entire series of blogs to cover adequately, but for our purposes here, you should be aware of the following financial and tax planning tips:
- Hire the right accountant or CPA firm
- Keep accurate, clear financial records
- Determine the right time and method for transitioning the business
- This includes business restructuring that could benefit both generations of owners
- This also includes exploring optimal buy-sell and governance structures
- Ensure the business transition plan integrates with the estate planning documents of the current generation’s owner/leader
- Explore the tax and estate tax benefits of transitioning the business as a “lifetime transfer” rather than benefit received when the senior owner passes away
If you’re ready to grow your family run business and tee it up for your next generation family member leadership, we can help you get there. Illumine8 Marketing & PR has helped family-run businesses of all sizes create, maintain, and improve their marketing, sales, and customer experience platforms to maximize customer loyalty, increase repeat business, and amplify their brand reach to generate high-converting leads.
Reach out to us today. We’d love to discuss your vision and how you see your company getting there.