Three business leaders share their experience of sitting on an advisory board and reveal an unexpected perk – advisors to family businesses gain as much as they give.
Family businesses are vital to the UK economy, employing almost half of the private sector work force and accounting for 88 per cent of all UK firms. But they also face unique challenges which may inhibit their success. Leaders from outside the day-to-day running of these firms can provide a fresh perspective to help family businesses overcome these challenges and unlock their full potential.
A sounding board to challenge thinking
A major challenge for family businesses is a lack of an advisory function. Jacqui Jackson, from Thomas Jardine & Co, believes that boards are crucial for challenging the status quo and thinking within a business. This is especially true for businesses with close personal relationships, and where personality clashes might be guiding decision making.
“SMEs are constantly growing and changing. It can get messy, so they need a board that can change accordingly and share a wide range of functions,” explained Jacqui Jackson, Thomas Jardine & Co
New challenges lead to new insights
For Robert Hough, chairman of Peel Airports, this board level experience provides even the most seasoned of business leaders with new challenges and opportunities in a different environment. While supporting family businesses to overcome obstacles, advisors also develop their own management skills and pick up new insights that help with other roles.
“By being on a board, advisors learn how SME and family run businesses actually work, the challenges they face, and the solutions open to them. It’s these kinds of insights that leaders bring back with them and apply to their own businesses,” said Robert Hough, Peel Airports
Business size determines the need
We know that a key challenge for family firms is that missing advisory board. But what areas of family businesses are most in need of addressing by this kind of support? According to Tim Kemp, director of Warren Partners, this is largely determined by the size and sophistication of the business. Larger businesses will likely benefit most from specialist skills and expertise. For example, planning for international expansion, moving in to a new product sector, or considering an IT investment.
For smaller or less developed businesses, owners or managing directors might just need a sounding board to help guide their decision making.
Influential advisors use active listening
While business size might call for different expertise, the most critical skill for an advisor to have is active listening. For Kemp, the best way to influence management is through doing your homework and asking the right questions.
“As an advisor you should understand the business as comprehensively as possible. The more knowledge you have the more value you can contribute. Rather than implying the right answers, ask the right questions so the business comes to a conclusion themselves,’ commented Tim Kemp, Warren Partners
For both Kemp and Jackson, strong advisory boards ask challenging questions which provoke critical thinking and action within a business. To do this they must maintain their independence and adopt a coaching style.
By sharing time and expertise with these firms, business leaders are actively developing their management skills, and testing their capabilities in new contexts. In the process they are giving back to the wider business community and ensuring that this important sector thrives.