Q&A: Family Businesses & Their Unique Challenges

Challenges of Family Owned Businesses

Meet Chris Van Den Elzen. He’s a seasoned member of the Kessler Consulting CFO team with 20 years of experience working with large companies, and specializes in helping family-owned businesses reach their full potential. Here’s what he has to say about the structural needs of family businesses:

Q: What’s the foremost problem family businesses experience during their growth cycle, and how can a CFO help?

A: Family businesses often lack a concrete succession plan and functional organizational design. One of the major benefits of bringing in a CFO to a family business is the opportunity to address what skills are essential now, and which ones will be needed in the future. A CFO can build a board of advisors, create functional organizational charts, and optimize business organization according to specific growth goals.

Q: But don’t CFOs spend most of their time directing and managing the finances of a company?

A: Not always. A skilled CFO should work on securing capital, building a financial plan, and instituting comprehensive financial reporting – but that’s not all they need to focus on. I spend a great amount of my time in operations optimizing systems and making them scalable. I think that surprises some people, but CFOs are strategic partners, which is what sets us apart from accountants or controllers. Without substantial rigor – or processes – any company will struggle to generate enough profit to sustain growth, so that’s part of my focus.

Q: How do family-owned businesses struggle with processes and systems, and what can a CFO do to address the problem?

A: Even a successful family business can suffer from the “paperwork tornado” effect, which is a symptom of informal and undefined processes within a company. Administrative and operational irregularities negatively impact overhead costs, workflow efficiency, employee training, and financial reporting. By facilitating new operational exercises, a CFO works to cut unnecessary waste, restructure budgets, and reduce uncertainty. The overall strategy is a straightforward one: take a family business’ organic growth and build the appropriate systems and processes that make it sustainable and optimized.

Q: If a family business has experienced great organic growth in the past, why should they make any operational changes?

A: It comes down to the growth goals of an individual family business. Want to double in size over the next five years? It’s been done before, but it takes a lot more than simply doubling staff and hoping for the best. You have to change the way you do business in order to make it scalable and sustainable. Lack of process efficiency and optimization may not appear to hinder your business now – but it will as you expand your current operation and take on more business.

Q: What drives you as a CFO to specialize in family-owned businesses and help them with such complex structural issues?

A: Family businesses are so passionate about what they do – their excitement and drive is contagious. The people behind a family business are often exceptionally talented, and could hold very well-paying, important jobs at large companies. Instead, they put their livelihoods on the line to pursue their dreams. I enjoy helping those kinds of people succeed.

To learn more about Chris Van Den Elzen, check out his bio. Kessler Consulting’s team-based approach provides businesses with the expertise of our entire staff on a flexible and reliable basis. Visit our Contact page to get in touch with one of these experts.