When a Family Business May Benefit from Outside Advice
Family-owned businesses play an important role in our economy—and in many cases, they become one of a family's most valuable assets. In fact, according to the U.S. Small Business Administration, millions of family-owned businesses contribute significantly to economic growth nationwide.
As businesses grow, so do the opportunities and complexities that come with managing them. Many successful family businesses find value in seeking guidance from experienced professionals who can provide specialized knowledge and objective perspectives.
Whether your business is just beginning to expand or has operated for generations, building the right team of advisors may help you navigate important decisions with greater confidence.
Why Consider an Advisory Team?
As a family business evolves, the decisions often become more complex. Issues involving taxes, succession planning, financing, governance, and wealth management frequently involve professionals from multiple disciplines.
Many family businesses establish an advisory team with two broad objectives:
* Supporting the continued growth and long-term success of the business.
* Helping family members make informed personal and financial decisions.
Not every family business needs a formal advisory board. Smaller businesses often rely on trusted professionals informally, while larger organizations may establish a more structured advisory team as their needs evolve.
Key Professionals Often Found on an Advisory Team
While every business is unique, several professionals commonly play important roles.
Accountant
An accountant is often one of the first professionals family businesses rely on. They provide valuable insight into financial reporting, tax considerations, and overall business performance.
Corporate Attorney
Corporate attorneys can assist with legal matters affecting the business, including contracts, financing, ownership structure, and risk management.
Commercial Banker
As businesses grow, access to capital often becomes increasingly important. A commercial banker can provide insight into financing options and lending relationships.
Other Specialists
Depending on the company's goals and circumstances, additional professionals may include:
- Family business consultants
- Executive coaches
- Human resources and compensation specialists
- Wealth managers
The composition of an advisory team often changes over time as the needs of both the business and the family evolve.
What Makes an Effective Advisory Team?
The most effective advisory teams often share several important characteristics.
Technical Expertise
Each advisor should possess deep knowledge in their area of specialization and experience working with businesses facing similar challenges.
Understanding the Business
Advisors who take the time to understand the company's operations, industry, and family dynamics are often better positioned to provide meaningful guidance.
Collaborative Mindset
Perhaps most importantly, advisors should work well together. Complex decisions frequently benefit from multiple perspectives, and collaboration among professionals can help ensure recommendations consider a variety of factors rather than a single area of expertise.
How Family Businesses Often Find Trusted Advisors
Finding the right professionals is just as important as determining which professionals you need.
Many family businesses identify advisors through one or more of these approaches:
Referrals from Existing Professionals
Trusted accountants, attorneys, and other advisors often introduce business owners to specialists when additional expertise is needed.
Recommendations from Other Business Owners
Networking with peers can provide valuable insight into professionals who have successfully worked with similar businesses.
Following Industry Thought Leaders
Professionals who regularly share educational insights and demonstrate expertise through speaking, writing, or research can become valuable resources when evaluating potential advisors.
Building a Strong Advisory Network
No single professional has every answer.
For many family businesses, bringing together professionals with complementary expertise can help provide broader perspectives on important decisions affecting both the business and the family.
As your business grows and circumstances change, periodically evaluating your advisory team can help ensure you have access to the expertise most relevant to your current goals and challenges.
Final Thoughts
Every family business is unique, and the professionals who support one business may not be the right fit for another.
The key is building relationships with trusted advisors who understand your business, communicate effectively, and provide guidance tailored to your family's specific objectives.
If you own a family business and would like to discuss how your personal financial planning fits alongside your business strategy, we'd welcome the opportunity to have a conversation.