business and family, business coaching, business consulting, business kids, disadvantages of a family business, family business succession, family governance, family managed, institute of family business, my business, small business advice, succession family business
Every family has issues, the ones who resolve them succeed the test of time: This brief glimpse into the life of Forrest Mars (inventor of M&M) and his disagreement with this father (Frank C Mars, the founder).
“Born in 1904, [Forrest Mars] inherited the privately held company from his father, Frank, who developed the Milky Way candy bar in the 1920’s and quickly had a hit on his hands. Forrest Mars, however, is credited with suggesting some ingredients for the candy. The two ended up squabbling, and Forrest Mars went to England, where he marketed the Milky Way with some variations in the formula. During World War II, he returned to the United States and introduced a candy-coated chocolate that he named M & M’s, based on a popular European product.”–Link from Hays, Constance (1999, July 3). Forrest Mars, 95, Creator of the M&M and a Candy Empire. Retrieved from http://www.nytimes.com/1999/07/03/business/forrest-mars-95-creator-of-the-m-m-and-a-candy-empire.html
What is the take away from the Mars family?
In an article at companyfounder.com; the author goes into ten main issues regarding family business problems. The list the author, Paul Morin of the post includes are as follows:
1. Lack of family mission statement connection to strategic/tactical plan
2. Lack of well trained and qualified future leaders
3. Competition from Entrance to Multinationals
4. Poor communication between generations and branches of family
5. No Plan for exit, or if not exit, effective succession
6. Lack of interest in business by successor generation
7. Lack of understanding and documentation of corporate governance
8. Lack of formal budgeting and planning process
9. Lack of board and management outsider (non-family) representation
10. Lack of access to debt and equity capital for growth.
The list does not stop here, but some of these are issues that I have heard over again from people involved in family businesses. I.e. “lack of family mission statement”, “lack of well trained qualified future leaders”. It is very easy for families to be absorbed in making money and survival mode, than it is to think about the future of the business separate from the family. Similarly, it is easy for the future generations of family businesses to decide to work for the family business over working for another company, gaining experience to bring back. Either way, it is good for the family business to create a mission statement that encompasses the goal of the family. Paul Morin writes the importance of having both a strategic plan and mission statement, both of which often times contradict each other. It is important for families to realize to create a mutual mission statement that includes strategy is invaluable. If there is a board or higher management that disagrees with writing the mission statement, the family should have one on their own.
The next issue that is of equal importance is the lack of well trained qualified leaders. It’s important for members of a family business to get training from an outside company to bring back to their own. They may also start from the ground up, working their way amongst the ranks to the senior positions. It gives other employees the opportunity to work with them, but also gets them ready to understand what it is like to lead from the top level. Although, this is a great option, it does not compare with the opportunity to work for a firm that has no connection to the family business, where the individual has to prove their worth. That may not always be available, it certainly takes a lot of hard work to find positions, but it is an opportunity that is worth looking into.
These are some of the issues that face family businesses, there will be more covered in the coming weeks.