Family Business Consultant vs Business Consultant

One of the questions I often get asked is what the difference is between what I do as a Family Business Consultant and what a business consultant would do?

It can often be really difficult to know whether bringing in a business consultant is what you need or whether a family business consultant is right for you.

Whilst there is only a single word difference in the job title. The job descriptions are very different.  

In this post I look at what each does and how each can help you and your family business.

Business Consultant

I am not a business consultant, so I have taken the below from my experience of working with a couple and what I know from meeting many more. There will be differences depending on the individual consultant you use but this gives you a feel.  

It may sound obvious, but a business consultant is focussed on helping the business and those within (typically) the senior management team to improve the performance of the business, be that growing sales or increasing profit etc.

They might help you to create a new business plan with new key performance indicators to measure progress and improve how the business operates.

This may be through introducing and implementing new processes, looking at sales and marketing functions within the business, suggesting how efficiencies can be achieved or focussing on a particular area that you don’t have internal resource for such as HR or IT.

Some may bring specific industry knowledge that is relevant for the sector you are operating in and experience of working with other businesses in that sector

When you are working within a business, it is not always obvious to you where things need to change in order to get the results that you want. A business consultant can bring that external perspective and experience to help the business and those responsible for delivering on the strategy of the business to do so.  

Family Business Consultant

The key difference between a business consultant and a family business consultant is the presence of the word family both within a family business and within the job title ‘family business consultant’.

The presence of multiple family members within the ownership or management of a business brings an additional layer of complexity that can create challenges that non-family owned businesses just don’t face.

This is explained visually using the Three Circle Model that was created by Prof. John Davis and Renato Taguiri (you can listen to my interview with Prof. Davis about the model and why it remains so relevant in this episode of my podcast)

Again, an obvious statement but a family business consultant will work with the business owning family to help them to navigate this additional complexity.

The work that I do as a family business consultant aims to positively impact the family system, the ownership system and the business / management system but doesn’t replace the work a business consultant would do.

Whereas a business consultant will work with management or business ‘system’ to bring improvements here, they won’t work with or typically consider any family members who own shares in the business but don’t work in it, nor will they work with the spouses of those family members to get their viewpoints on the role of the family business in their lives.

These individuals are able to influence the business and deserve to have their voices heard when decisions are being made that will impact them.

Similarly, they won’t help the family decide who can own shares in the business, who can work within the business and how conflict should be dealt with when it arises.

Let’s use an example to better demonstrate this.

Widgets Limited is a second-generation family-owned business. It is run by the eldest son of the founder who is now enjoying a new role as Chairman and retains a small ownership (10%). His daughter is the Operations Director and there is a third child who has no involvement with the business but because Mum and Dad wanted to be ‘fair’ to all their children they each own 30% of the shares.

The relationship between the MD and the Operations Director is suffering as sister feels that she is far better suited to run the business and feels that the business should diversify and expand their product range. Her husband is very vocal at home in telling his wife she should be running the business and feels it’s very unfair that her brother earns more as MD.

The MD shares his Dad’s view that it is far better to “stick to what we know” than it is to try something new, particularly as sales are starting to suffer and now is not the time to be changing things.  

Dad keeps popping in and dropping the occasional ‘grenade’ and interfering with the senior management team by undermining what is being said at Director level.   

The third child is asking why their dividends have reduced over the past couple of years and is demanding it increase as they had already made plans on how to spend it.   

Mum is caught in the middle of it all and just wants everyone to be able to get along rather than fighting over the dinner table at family gatherings.

A business consultant in this scenario would come in and work with the MD, the Operations Director and the senior management team with a brief to help bring sales back and to grow profitability.

However, the family dynamics that are at play in the background may seriously scupper the chances of success because there are conflicting priorities at play within the family system.

My role as a Family Business Consultant would be to speak with those within the ownership system, the family system (possibly including spouses) and probably in this case the senior management team.

I would then work with the business owning family to help them gain clarity and consensus on why they are in business together, what the purpose of the business is and what role each of them should play within that.

This may involve difficult conversations around the different priorities that each of the owners have but spending time getting that clarity will allow the business to focus on delivering what the family want. The alternative is that it remains unsaid and family relationships as well as the business continue to suffer.

Introducing the appropriate communication forums that ensure the right people are talking about the right things at the right time will help how the owners of the business communicate with each other and the management teams, help them to make decisions and set the strategy for the business more efficiently.  

This helps to build consensus and commitment among the family and therefore leads to greater clarity within the management system in the family business and will allow a business consultant to be more effective here too.

Who to work with

This gives you a flavour of the difference between a business consultant and a family business consultant.

Perhaps the best starting point is to agree as a family what it is that you are either looking to solve, or looking to achieve. If that cannot be agreed upon it may be a sign that a Family Business Consultant is the best starting point. 

It is not always the case that there is a lack of coherency in the family system, but in the above example there is.

Depending on the level of clarity and coherence there is amongst your own family may help you in deciding which is most appropriate and comes down to a potential chicken and egg situation of;

Will a well-functioning, coherent family ownership system with clarity on the role the family business can play in each their lives lead to the results needed within the business or a would a well-functioning, growing and profitable business lead to greater coherency within the family?

There is also no reason why a business consultant and family business consultant can’t work together to combine their specialisms if you feel that both are needed. There are obvious costs implications, but it should not necessarily be seen as one or the other decision.

I’m here to help

If you would like to discuss whether I could help you and your family business I would be delighted to speak with you.

Inviting an external consultant into your business and your family is a big step, I appreciate that, and it is not a responsibility I take lightly.

I have worked with family businesses for 15 years and hold the Advanced Certificate in Family Business Advising.

I understand what is at stake.

I provide empathetic, expert and impartial support to family businesses just like yours to help you to achieve what you want to with your family business.  I help you to do the things that you may struggle to do well in-house.

I am patient but my eye is on getting the right solutions as effectively and quickly as possible. 

I have in my sights at all times, the wellbeing of each family member – and the all-important non-family employees too – as individuals in their own right, the future harmony of the family as a priceless unit, and the success of the business in so far as it aligns with the happiness of the individual family members and the family as a whole.

In short, I have the interests of all in mind when I do my family business work, and I have a rare combination of skills that enables me to do such complex and long-term work successfully.