Shifts Closely Held Businesses Must Undergo to Remain Viable

You may have read about the recent bankruptcy filing of clothing retailer Forever 21. And while this drastic step seemingly came out of the blue, it’s a familiar story. A growing, successful family business failed to heed the sage advice of others or take a long-term look at the business landscape in order to mitigate risk. 

Many family businesses tend to grow organically, rising from a small start-up mindset. Unfortunately, they often fail to make the changes necessary to evolve from an entrepreneurial style of management to a “durability mindset.”  

Business owners can become so entrenched in their companies and in doing things that have always worked in the past, however, they miss seeing some of the most important indicators that all is not well. In order for closely held businesses that have grown and become successful companies to remain viable, relevant and sustainable, they need to undergo several important shifts:

• Test assumptions.
• Obtain outside advice and actually use it.
• Learn to gather and use market information and associated data analytics to help more accurately predict future trends.
• Grow an organizational culture and capability at the same time as you grow your company.
• Bigger is not always better. Determine your specific niche, refine it, hone it and grow it.

It’s no secret that successful entrepreneurs take risks. But these need to be calculated risks. Owners needn’t become risk averse, simply risk aware. Building a strong and experienced board that can help to develop a solid strategic plan and that is positioned to navigate both current and future challenges are key components of success. Additionally, develop a step-by-step process for innovation and investment. This can provide opportunities for the business to remain nimble, test the market quickly, and pull back to regroup and re-launch if necessary. This can be a saving grace for companies that are learning and growing. 

Our hope is always that companies can continue to grow and thrive, create jobs and contribute to the economy—all while protecting and honoring their families.