Succession Planning Part 22: Managing A Family Business (Part 2)
This is the second of a 4 part checklist for managing a family business.
q Do you test or check the reality of your goals and plans with others?
Outside advisors may spot “bugs” that you and your people did not catch in the press of working through the details of goal setting, budgeting, and planning.
q Are operations reviewed on a regular basis with the objective of reducing costs?
Costs must be kept in line for a profitable operation. Review operations periodically such as weekly or monthly, to insure that overtime is not excessive, for example. And what about quality product acceptance by customers? Costs may be excessive because of obsolete methods or machinery that has seen its best days. And what about plant layout or materials flow? Can changes be made that will save time and materials? Determine the frequency of your reviews for the various types of operations and place a tickler on your calendar to remind you of these review dates.
q Are products reviewed regularly with the objective of improving them?
Products that your customers benefit from are the keys to repeat sales. A regular review of your products helps to keep them up to the expectation of customers. Feedback from customers can be useful here. To reduce costs sometimes a product can be modified without sacrificing use and quality. If product obsolescence is a hazard, what plans are being made to substitute new products, as existing ones become obsolete?
q Do you ask outside advisors for their opinion and suggestions on products and operation procedures?
Outside persons can help you see the facts about your products and operating procedures. They can provide a fresh viewpoint – the viewpoint of persons who are not so involved in the products and operations as you and your key personnel. The suggestions and counsel from a local management consultant may provide benefits far in excess of his or her cost. In this area some small companies set up a board of directors to satisfy the law concerning small corporations. But that is the end of it. Members of the board are not used for their knowledge and skill in business. They can make valuable contributions and the owner/manager should use all possible opportunities for getting such concerned opinions about the various phases of the company.
q Are marketing and distribution policies and procedures reviewed periodically?
The best made product in the world can run into trouble if marketing and distribution policies and procedures are not right for it. Periodical checks can help you to be aware of changes that may be taking place in the channels through which you distribute. One approach is to check your competition; does it seem to be changing channels and policies? Can you still meet the requirements of your customers by using your traditional channels of distribution?
q Are there periodic reviews of profit and loss statements and other financial reports?
In these reviews you can compare your operating ratios to those for your industry. It is also helpful to review your cash flow projections to see what, if any, changes are needed in your financial planning.
q Do you have an organization chart?
You may need only a simple organization chart to show accountability and to establish a chain of command. In a family business, accountability and chain of command should be spelled out so that the one who is the chief executive of the company has the “mandate” he or she needs for managing.