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Family businesses are a collection of individuals working as one – of course they often take on the personal characteristics of the individuals behind them. But when something changes and either the individuals or the business as a whole loses its mojo, it’s not a great place to be. To use the Jim Collins analogy, it would be like driving a bus with your team hanging out the windows, no one looking in the same direction and the driver, well he probably wishes he was somewhere else.
A business that lacks the passion, the energy and the drive, will always struggle to achieve its vision.
The first step is recognizing that the business has lost its mojo.
What is the indicator that tells you a business has lost its mojo? Constantly declining sales. Increased staff turnover. A new [more passionate] competitor steals market share. Maybe the individuals in the business have stopped putting forward new ideas or are avoiding taking on anything new – they are avoiding change.
Before you even start addressing the required change in the business, you need to make sure the business [and the people behind it] are change ready.
So, that business has lost its mojo – what are you going to do about it?
The options are simple:
1. Get out
2. Fix it
3. Do nothing [not really an option in my mind]
But within these options there are of course variations.
‘Getting out’ could be coming up with [and implementing] a succession plan. It could be divesting the business of a product or service line to refocus attention on a smaller component of the business. Why not apply the Pareto rule – 80% of profits can often come from 20% of the product lines. You could sell off the whole thing or just a division. It could be enough to give the business a shot of energy and bring back the mojo.
My top 5 tips to help with a succession or divestment strategy:
‘Fixing it’ could start by looking at Pareto in another way - 80% of the problems may come from 20% of the product lines, 20% of the team members or 20% of the customers. What part of the business is broken? What part of the business needs fixing? What part of the business needs change?
‘Fixing it’ requires some type of change. If the business is already change fatigued this may not be an option. But when I am talking change, I am talking fundamental change – breaking away from tradition and forcing different behaviours.
Often the problem in the business is the owner. Family businesses are commonly too reliant on the owner and their contribution to the business. If a business is ‘investor ready’, it will be less impacted by its owner and their own personal drive. If a business is investor ready, it will also be more succession ready.
Need help: Complete the investor ready diagnostic
Doing nothing of course can only end one way – badly. Not only will the business suffer, personal lives will too. Do something. Fix it or get out.
Word of warning: Don’t be surprised if once you have made a business investor ready, the mojo returns and the owner decides to stay in the business – I’ve seen it happen many times before!
Know someone who has lost or is losing their mojo? Review our tips in our previous article ‘Oh no, that business has lost is mojo’.
At businessDEPOT we are all about empowering the bright ideas of small to medium businesses [and the people behind them]. Whatever your problem, we can lead you in the right direction – whether it be to get out or to bring back the mojo.