Difference Between Typical Family Business and Professional Family Business: Insights from Ameen Ahsan, The Strategy Advisor

Family businesses are a cornerstone of economies worldwide, particularly in the GCC region. While they offer unique strengths, transitioning from a typical family business to a professional family business can significantly enhance sustainability and growth. Ameen Ahsan, a renowned strategy advisor, delineates the key differences between traditional and professional family businesses, highlighting the importance of professionalization for long-term success.

Decision-Making Processes

Typical Family Business: Decision-making in traditional family businesses is often centralized and driven by the head of the family. This can lead to quick decisions but may also result in a lack of diverse perspectives and potential biases.Professional Family Business: In contrast, professional family businesses adopt a decentralized approach, involving professional managers and board members. This inclusive process leverages diverse expertise, ensuring well-rounded and strategic decisions​(02)​.

Succession Planning

Typical Family Business: Succession is usually based on family hierarchy and tradition, often without formal planning. This can lead to unprepared successors and potential conflicts. Professional Family Business: Succession in professional family businesses is structured and merit-based, with clear criteria and early grooming of potential leaders. This ensures that successors are well-prepared and capable of leading the business effectively​​.

Conflict Resolution

Typical Family Business: Conflicts are typically resolved informally within the family, which can lead to unresolved issues and ongoing tension. Professional Family Business: Professional family businesses implement formal conflict resolution mechanisms, often involving external advisors or mediators to ensure impartiality and effective resolution​​.

Innovation and Adaptability

Typical Family Business: There is often a resistance to change, with a preference for tried and tested methods. This can hinder innovation and adaptability. Professional Family Business: These businesses are open to new ideas and driven by professional expertise and market trends, fostering innovation and adaptability essential for staying competitive​.

Performance Evaluation

Typical Family Business: Performance evaluations are subjective and influenced by family relationships, which can lead to biased assessments. Professional Family Business: Performance is evaluated objectively based on clear metrics and professional standards, ensuring fairness and encouraging high performance​​.

Talent Acquisition

Typical Family Business: There is a preference for hiring family members, which can limit the pool of talent.Professional Family Business: These businesses are open to hiring the best talent from outside the family, bringing in diverse skills and perspectives to drive growth​.

Financial Management

Typical Family Business: Financial management tends to be conservative, focusing on preserving family wealth.Professional Family Business: Financial management is strategic, focusing on growth and reinvestment, ensuring the business can capitalize on new opportunities and sustain long-term growth​.

Strategic Planning

Typical Family Business: The focus is often short-term, guided by immediate family interests & needs. Professional Family Business: Strategic planning is long-term and driven by comprehensive market analysis, ensuring the business can navigate future challenges and opportunities effectively​.

Governance Structure

Typical Family Business: Governance is informal, with family members holding key positions. Professional Family Business: There is a formal governance structure, including a board of directors with non-family professionals, an Owners Room, and a Family Council, ensuring transparency and accountability​​.

Accountability

Typical Family Business: Accountability is less formal and based on family trust, which can lead to inconsistencies.Professional Family Business: High accountability is driven by professional standards and key performance indicators (KPIs), ensuring that all actions align with the business’s strategic goals​(02)​.

Leadership Development

Typical Family Business: Leadership development is based on seniority and family ties, which can overlook potential talent. Professional Family Business: Leadership development is based on merit, with structured programs to cultivate future leaders, ensuring a robust leadership pipeline​.

Company Culture

Typical Family Business: The culture is strong in family values, sometimes resistant to outside influence. Professional Family Business: The culture is inclusive, blending family values with professional practices to create a dynamic and adaptable organisational environment​.

Conclusion

Transitioning from a typical family business to a professional family business involves adopting more formalized and structured approaches across various aspects of the business. Ameen Ahsan’s insights underscore the importance of professionalization for enhancing sustainability, growth, and long-term success. By embracing these changes, family businesses in the GCC region can better navigate challenges, capitalize on opportunities, and ensure their legacy endures.

For more expert advice on family business continuity, professionalizing operations, and crisis management, visit Ameen Ahsan’s website (ameenahsan.com ) and explore the range of resources and advisory services available.

Family Business Advisory Service by Ameen Ahsan  

To Know More About How Ameen Ahsan Can Assist Your Family Business, please watch the video https://youtu.be/qOHVL8GgIXY?si=RRkqwUxMUZEB5Yg3