The Top Five challenges facing a family business
But, just as today’s families are becoming more and more complex and extended, also, there is a whole host of challenges facing family businesses in 2017.
To help you get to grips with successfully operating a family business – and keeping everybody happy – we have put together a record of our Top Five challenges that confront today’s family business and how to cope with them.
The Top Five challenges facing a family business
Best match for the job
In a family business, there’s the urge to give everybody a specific function so that everyone is treated equally. The problem is that in business, not everyone is equally capable: some are better at certain things than others.
To achieve best company results, family businesses need to make sure that the best individuals are set up for each job – whether or not these people are in the household.The Top Five challenges facing a family business.
While there can be benefits to several family members using an overall comprehension of various facets of running the company, it is also vital to make sure that each family member is a perfect match for the particular job that they are supposed to do. Merely creating positions for family members or committing tasks which don’t fit their abilities frequently backfires.The Top Five challenges facing a family business.
This can become even more complex because once somebody is used to do a project, it can be very tricky to move them from it – both regarding the legal side of things and the household emotions involved. Much better to set strict recruitment criteria beforehand for each job in the company and be sure that only the best applicants – whether family or not – are believed.The Top Five challenges facing a family business.
Honest and consistent policies
In a family business, it’s also imperative to be clear about the plans of the company the that employees will need to stick to. It is essential to develop thorough employment policies which everybody understands and accepts as part of the terms and conditions of employment. These systems must cover every aspect of work, for example, behavior and performance standards against which workers will be evaluated once employed.The Top Five challenges facing a family business.
Having clear policies will help to eliminate misunderstanding or assumptions about family involvement in the business and clarify the qualifications that family members need to be considered for job or leadership functions within the company. Such policies also bring consistency and make sure that everything is reasonable for all family members and even for non-family members.
Compartmentalisation of household and Company
Closely linked to fairness, compartmentalization is your ability to separate out the business issues from the household issues, and not be swayed by personal feelings – both positive or negative – between relatives.The Top Five challenges facing a family business.
In any company, there must ideally be compassion – and some level of leeway – for people that are going through an awkward moment. However, a family business must beware of allowing feelings and worries overwhelm the company need. Business is business, no matter who is involved.The Top Five challenges facing a family business.
At precisely the same vein, it is worth having the family rule that business is only discussed during business hours, or you will find that it becomes all-encompassing and intrudes on other occasions like holidays and family celebrations.
It can be beautiful when a family business includes and involves people from a couple of different generations, but it may also be a minefield! The older generations will feel passionate about the company that either they founded or consider their own, while younger members of their household will have their thoughts about how to make things work – and particularly maybe about how to adopt new technology and working procedures. When the younger members are faithful to participate in their company, they then require a real chance to contribute ideas and expertise – perhaps for example on an allocated everyday basis. They also need to understand and respect that the wisdom and experience of the old generation is a valuable advantage not to be overlooked. The Top Five challenges facing a family business.
If desired then some arranged interactive training sessions or joint training in particular skills and abilities might help to engender mutual respect and knowledge sharing.
The younger members of the business may also feel a strain to keep in the industry and see it almost as a sort of prison that keeps them bound into the family business and prevents them from fulfilling their dreams. The Top Five challenges facing a family business.
This should be discussed up front so that the older generations are free to form alternative succession plans along with the younger generations to pursue other avenues when that is what they want to do.
If your family business is confronting this challenge, you are not alone. According to the US Conway Center for Family Business, 30% of household businesses transition into the second generation, 12 percent to the next generation, and just 3 percent to the fourth production. With only about a third of household businesses continuing to another age, it is essential to have adequate succession planning in place for any hope to the survival of a family enterprise.
Fair Business Loans provides business loans for UK household companies. If your household business needs additional small business funding, then get in contact with us in Fair Business Loans, and we will see what we can do to help your family business grow.