What are the Most Common Issues That Family Businesses Face in Making Strategic Finance Decisions?
The US SBA indicates that 77% of all small businesses have issues with securing enough capital to run their business, grow their business, or exit their business to achieve their personal goals.
But family businesses have a unique challenge. Common family conflicts and issues can substantially impact the businesses’ performance, its culture, other non-family employees, and customers.
There are many factors that we have seen influence the likelihood of a family business entering into the right capital market/strategic finance solution. Two of these factors rise above the others. The first is the maturity and professionalism of the executive leadership team and the family business’ board of directors. The second is professional structure to support the family in taking a holistic view of not just the business, but topics surrounding the interests of the family.
A third factor, family cohesion comes close (the degree to which a family functions well and authentically cares about its members well-being as a whole).
A fourth factor is the degree of family versus non-family ownership stake and composition of family ownership.
Within minutes, we can usually determine a family businesses’ likelihood of effectively assessing capital market and strategic finance solutions for their situation.
In our work with family businesses we’ve seen these factors most commonly impacting outcomes. Most family firms have no chance at effectively assessing the range of capital solutions available to them without a professional in the leadership of the business. The more professional a firm’s functioning leadership structure, the higher the chance that the firm can make the right decisions about scaling, M&A, and exiting the business.
The more professional support a business has, the higher its likelihood of success - and this is a consistently positive factor. In the graphic below, we discuss how these factors relate to a firm’s success in evaluating capital solutions.
We discuss these factors and more in our 2025 guide, Revealing the Secrets of Investment Capital and Mergers & Acquisitions for Small and Mid-sized Businesses
2025 Investment Capital and Mergers & Acquisitions Guide for Small, Midsized, and Family Businesses. Look for its release in early February. If you have any questions about how to secure financing, expand and growth, or attain investors or an exit of your business, ShadowHornet Advisors is here to help! Contact info@shadowhornet.com to learn more today!
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