Advising family businesses calls on a unique and challenging blend of business consultancy and people skills. Those running family businesses often succeed through an intriguing ability to mesh emotional intelligence with commercial considerations to drive performance. It stands to reason they expect a similar approach from their advisors, who have to be able to provide robust strategic analysis and tactical financial guidance but which is absolutely in the context of family relationships.
Not that family businesses are soft and fuzzy. Our latest Global Family BusinessSurvey found that nearly six in ten family business leaders disagreed with the statement that “emotions and sentiments often affect decision-making processes in family firms.” This suggests that those running family firms may have a highlevel of respect for emotional dimensions of business but when it comes to making decisions, those become secondary to hardcore business considerations. This was particularly evident when the survey queried the characteristics thoserunning family businesses would be most interested to find in potential investors in their firm. Issues such as trust, similar values to the family or a family business mindset came well after industry expertise, a similar appetite for business risk and return and the skills and capabilities they could add to the board.
In other words, family businesses don’t really “choose” between hard and soft factors in decision making. The most successful ensure they focus on both and give them the importance they each deserve. Emotional dimensions matter, undoubtedly more so than in other business ownership models, but not to the cost of purely business issues.
In fact this experience of coping with challenging dilemmas that blend commercial and emotional components can prove to be a key differentiator. I’ve seen nimble thinking and an analytical approach deliver real competitive advantage to family businesses in today’s complex and fast moving environment.
This could go some way to explaining the confidence in the family business sector, with 70% of executives optimistic about their prospects according to our European Barometer. This is important for the wider economy, given the boost such positivity gives to investment and growth intentions and ambitions.
It puts a whole different spin on asking after a client’s children when it’s not just small talk; I can be learning about an entrepreneur’s succession plans, HR issues and wealth management intentions, and I need to factor these into future conversations and advice every bit as much as economic data or industry insights.