All businesses seek growth, but it is even more important in a family owned enterprise which requires growth to sustain the growing family.
Recent research has revealed that family businesses across the globe are increasing turnover, employment and profits better and faster than the large corporate entities.
Unfortunately, many family businesses are often not prepared for the struggle of managing the business effectively during this growth phase.
All businesses, from startups to family-owned businesses, need to ensure that the business is ready for the growth.
To help your family business growth planning, KPMG Enterprise have identified essential areas which should be assessed on a regular basis:
• Value creation and future focus – Is the business aware of the changing dynamics in its existing market, opportunities to diversify or introduce new products/services? This is especially important in the rapidly changing world we are currently living in.
• Business strategy and planning – Many businesses do not have a clear growth strategy that enables the business to understand: Where it is going (the vision and purpose, financial goals and strategic priorities); Where it will play (clearly defined business model detailing the market(s), the value proposition and brands, customers and channels of communication) and How it will win (clearly defined operating model).
• Business structure, operations and finance – Are the appropriate processes and structures in place to provide accurate and timely financial and management information? Is the structure aligned with the strategy? Are key performance indicators and incentives in place which are aligned with the strategy?
• Human resources – Talent management is critical and therefore the business needs to ensure that they have the right people doing the right jobs. It needs to ensure that the processes for recruitment and retention of the right people are in place, succession plans for key positions are established and training programs are setup to improve internal staff skills.
• Technology ¬– Technology is critical in any business including ongoing investment and maintenance. Are measures in place to deal with cyber events or disaster recovery should a significant event occur?
• Governance – The appropriate level of governance is important to ensure that the business continues, especially with the increasing compliance with regulatory, tax and financial laws. Are the key strategic and operational business risks being reviewed on an annual basis? Does the business have appropriate insurance coverage? Does the business have the appropriate skills and experience as part of their Board of Directors or management team to help achieve the growth objectives?
Article first published by Alan Barr, Director, Head of Family Business KPMG South Africa.
