How do you make your family business less vulnerable?

Family businesses are often praised for their long-term focus and stable finances, but in some ways they are also especially vulnerable. How do you ensure a stable family business?


70 percent of companies are family businesses

While the big listed companies often make the news, it is right the family businesses that call the shots in the Netherlands. Figures from CBS (September 2016) show that more than 70 percent of all Dutch companies are family businesses. One-person businesses and Zzp-ers are then excluded. Most of the more than 270,000 family businesses do not have more than 50 employees, but there are 3,690 large family businesses with more than 50 employees and 365 companies with more than 250 employees.


Governance at family businesses often poorly regulated

The governance structure of medium-sized family businesses in particular is often one-sided. This means that in day-to-day management, the company is dependent on one or too few family members, that there are no proper checks and balances in place for supervision, or that succession is not properly arranged.

This makes a family business vulnerable. Vulnerable to the sudden loss of that indispensable director shareholder, vulnerable because too few alternative opinions penetrate the boardroom, and vulnerable because if the director decides to slow down, continuity is not always guaranteed.


Dependence on current entrepreneur limiting factor in succession

If, as in our practice, you focus specifically on family businesses and entrepreneurs, the above topics come up regularly. Often at the request of the entrepreneur when the family asks us to look for a successor or a new shareholder outside the family.

But also unsolicited. Is the dependency of the director-shareholder not as bad as he claims?  His people can often keep the company operational for a few weeks without his interference (“I can go on vacation for four weeks, no one will miss me” we hear). But what if four weeks become four months: often the shareholder undeniably leaves his mark on the company’s strategy. It is not easy to replace him.


Getting the company ready for sale while maintaining family DNA

In order to make the company ready for sale, it is important to put in place a second layer of management and to give these people the space to develop themselves and make their own decisions. These people must fit into the family DNA: this means that they must embody the same values and standards that are important within the family and that have formed the basis for the company’s growth and success.

Precisely the group of large family businesses identified by CBS can gain from better gouvernance. A good governance policy combined with long-term focus and financial stability ensures that precisely family businesses remain the cork on which the Dutch economy floats.

Do you want to know whether the governance structure of your family business needs to be adjusted or do you have questions about business succession? Call Clifton Finance: Maarten Vijverberg +31 6 55853074 or Gonneke van der Lee +31 6 52466518.


By: Maarten Vijverberg

By |2022-10-21T15:48:08+01:00October 13th, 2016|Blog|Comments Off on How do you make your family business less vulnerable?

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