Like every business organization family business has a unique set of challenges and problems

Like every business organization family business has a unique set of  challenges and Problems.

The Keyword is challenge

Family Business mixes pride and passion with pain and glory and a very hardworking pathway to success. Sometimes a family finds peace and prosperity without apparent effort, while others seem to lurch from one crisis to the next.

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.

Family Business is Hardworking Pathway to Success

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 non-participating 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 Credit:
familybusinessstrategies
freshpeel.com

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