Articles

You have recently taken over the Company that your grandfather started 50 years ago. Your father has been the CEO for the past 30 years, and now it is your turn to lead the family business.

Your business philosophies regarding growth and profitability are more in line with your grandfather, who believed in double-digit annual revenue growth and who was OK with single-digit profitability growth in order to expand revenues. Under your father’s tenure, the Company had slow, steady growth, and profitability was above industry benchmarks. 

You want to grow the Company through expansion into new markets or acquisition of a similar smaller company down the street. You are not sure if the talent is in place at the Company to take on your more aggressive growth strategies while settling for smaller profitability goals.

WHAT ARE YOUR NEXT STEPS?

We polled some of the Silver Fox Advisors, and below are some recommendations on what your next steps should be:

• It would be a good idea to meet with both the grandfather and the father to determine why they made the decisions that they did at the time so you have a better understanding of the internal and external factors and circumstances that went into making the decisions they did.
• The father’s business model over time is a good one (slow and steady growth and profitability above industry benchmarks), thus it might be a good for the father and son to get together, with maybe a third advisor, and develop some common ground, especially if the father is going to remain is some capacity at the company.
• The father and the son should also work together to develop a shared core vision for the company, if for no other reason than to continue the legacy of the company.
• It would be of value to clarify (in an educated manner) the internal talent pool and resources available before going forward with whatever the core mission and vision of the company is.
• It would also be worth reviewing any employment contracts and non-compete agreements that are in place with members of the management team in the event decisions need to be made regarding management changes.
• If the company has a board of directors, it would be a good idea to get the board involved with any path forward. Typically, outside directors or even advisors have business and other skill set experiences that can be capitalized on without having to either reinvent the wheel or go down a path whereby costly mistakes might be made.
• Having financing available is always a critical element of any planning process for a company’s future; thus it would be a good idea to develop at least three years of financial projections to determine what, if any, additional financing may be needed to achieve a plan going forward. Once those projections have been developed and agreed upon, it would be a good idea to have a meeting with the company’s banker to present the plan and make sure if financing is needed that the funds would be available to support the plan.
• Finally, it might be a good idea to schedule meetings with some of the company’s larger clients and confirm as much as possible that any change in the company leadership or business model does not present a potential loss of revenues already in place.