STRATEGIC PLANNING IN FAMILY BUSINESS
WHY STRATEGICALLY PLAN YOUR FAMILY BUSINESS?
Far from considering the act of planning a strictly rational action, linked exclusively to the achievement of quantitative goals, planning is the option of human beings to achieve their dreams. Perhaps we should ask ourselves if part of the chaos that we currently experience in all areas of life has been the result of having lost the sense of the purpose for which we were created: to contribute to a world of well-being, harmony, and happiness. The human being has been given free will to choose the path that leads him to achieve his dreams. Planning is the process of shaping this path.
The Strategic Planning of the family business, as the process through which the business dream is raised and shaped, is part of the best practices of family businesses, on their way to institutionalization.
The Shared Vision
Most successful family businesses have become so primarily because their founder had, at some point, a vision of what his business would be like in the future, and the skill and determination to follow that vision. As this dream materializes and the company develops, the founder’s family grows and his children become involved in the family business. The new generation, full of energy and innovative ideas, wishes to introduce changes in the company and this is where it is essential to combine the wisdom and experience of the father with the renewed vision of the children.
Having a shared vision between the first and second generations (and the succeeding generations) will allow the family business to overcome the natural crisis of the passing of the post office from the founding fathers to the children and allow the family business to be reinvented, so that be able to face new challenges and ensure their permanence.
The Environment: Its opportunities and threats and ability to face them (internal strengths and weaknesses)
Today’s globalized world offers countless business options that family businesses can take advantage of: the increasing facilities for exporting products to other continents and the increasingly advanced communications technology are opportunities that can be taken advantage of for Business growth. Likewise, the threats of external crises are factors that should not be ignored. The strategic planning process in a family business will allow you to make a systematic analysis of these opportunities and threats and of your internal strengths and weaknesses, on which you have to work to face the challenges of the environment.
The shared vision will be the beacon that guides the family business towards the desired dream: this vision will shed light on new markets and products, new businesses, company size, etc., that they want to have, however, it is necessary to set large measurable goals, the realization of which will bring us closer to the vision. It is important to set strategic objectives in the commercial (sales), financial (profitability), operational (processes), human capital (staff training and satisfaction), technological (product and process innovations) areas, to name the most important, that will set the tone for the development of all the operational plans of the organization.
Functional Goals and Alignment
Can we conceive of an orchestra trying to play a symphony where each musician follows his score at his discretion? We will simply listen to a set of meaningless noises. This happens if the functional areas of the family business act independently and out of alignment with the strategic goals of the organization. The objectives of each area of the family business must be derived from the guiding objectives, established at the beginning of the strategic planning process, and there must be a perfect alignment between them and those, in this way there will be synergy and use of resources throughout the organization. . This alignment process has to continue down to the lowest functional level, that is, up to each of the positions in the organizational structure. Each position within the organization must have objectives aligned with the objectives of the area, and be measured based on these objectives. In this way, each musician in the family business orchestra will play what corresponds to him at the precise moment, and the symphony written in the vision will be created.
Action Plans and Budgets: Create the Dream!
The formulation of objectives is not enough, it is necessary to specifically establish the activities and those responsible for carrying them out, to achieve the goals. The preparation of quantified budgets at all levels of the organization and their integration into a master budget will provide the management of the family business with a measurable basis, which will allow them to periodically evaluate progress in achieving the objectives set.
Strategic Planning is not a process exclusive to large multinational corporations, on the contrary, it is a necessary exercise in any company of any size, because it aligns the entire organization towards the future vision and establishes the paths to reach it.