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Surviving and Thriving in your Family Business
Top Challenges Faced by Family Business’s
Like every business organization family business has a unique set of challenges and problems.
We can define Family Business success as achieving, A Happy Family within a Strong Business.
Success is more of a challenge at a family owned business because we strive to produce both desirable
outcomes, within set time frames. We have twice the responsibility that is the happy family and the
strong business.
Obviously Family Businesses go through various stages of growth and development and it becomes
more challenging for the second generation or the subsequent generation that enters the business.
A famous saying about family owned business in Mexico is “Father, founder of the company, son rich,
and grandson poor” . The founder works and builds a business, the son takes it over and is poorly
prepared to manage and make it grow but enjoys the wealth, and the grandson inherits a dead business
and an empty bank account.
Www.familybusinessbattleground.com
Family Business Battleground
Surviving and Thriving in your Family Business
Below we have listed some of the paramount challenges faced by family owned business which
determines the success, growth, and continuation of a FAMILY BUSINESS.
1. EMOTIONS – Family problems will affect the business. Divorce, separations, health or
financial problems also create difficult political situations for the family members.
2. INFORMALITY – Absence of clear policies and business norms for family members.
3. RESTRICTED VISION – Lack of outside opinions and diversity on how to operate the
business.
4. CARELESS DOCUMENTATION – No documented plan or long term planning.
5. FAMILY MEMBERS COMPENSATION – Dividends, salaries, benefits and
compensation for nonparticipating family members are not clearly defined and justified.
6. CONFUSED ROLES – Roles and responsibilities must be clearly defined.
7. PRESSURE TO HIRE FAMILY MEMBER – Hiring family members who are not
qualified or lack the skills and abilities for the organization. Incompetency should not be
tolerated.
8. GREATER COMPENSATION TO NON FAMILY MEMBERS – It is a common myth
that family members will receive more compensation in a family business and develop a
attitude of incompetency towards management.
9. PLANNING FOR SUCCESSION – Great conflicts and division are the result of no
proper plan for handing the power to the next generation.
10. ESTATE PLANNING AND RETIREMENT – Long term planning to cover the
necessities and realities of older members when they leave the company.
11. PROBLEMS IN COMMUNICATION – Difference in level of seniority and emotions
like envy, fear, anger invoke zero communication in members.
12. DISABILITY TO CONTROL – Difficulty in controlling the operations of the
organization, other family members and lack of supervision in day to day activities leads
to more problems.
But as we all know that Families and Businesses come from different worlds. Like oil and water
… they cannot be mixed. But, families have always built businesses together… and they always
will.
Image Credits:
familybusinessstrategies
freshpeel.com
Www.familybusinessbattleground.com
Family Business Battleground
Surviving and Thriving in your Family Business
Www.familybusinessbattleground.com