Business life cycle continues more than one generation and hence it is quite likely that Business will see another Leader after 25-30 years. It could be disastrous if not planed thoroughly. However if it is fine strategically then it could come out to be beneficial for company as well as family.
Family with more than one child will have to face that after the first generation which Child will run the business. Is it based on age or capability to run the business both need to be considered but finally what matters is more capability and competency than age.
Make Sure that the Family Business doesn’t Ruin Your Family. There are countless ways a business can wreak havoc on a family. In the beginning, a family business sounds like a sensible idea.
Many Biz owners do not pay attention on succession planning.
Choosing a successor is a challenges and that challenge is so deep that sometimes they delay the process of finalising that will be running the company after them.
Sometime how successor is chosen but there is silent revolt in the family. How to overcome?
Sometimes succession planning is not formalised and not written properly as mostly verbal which also leads to confusion.
Challenges of Family Business
All businesses face challenges, whether it is dealing with the changing economy, finding and hiring the right employees, or increased competition in the market. Family-owned businesses are not immune to these challenges. In fact, there is also a unique set of challenges that family-owned businesses have to face as a result of the nature of their business structure. It is important to understand what these hurdles are so that if you find yourself facing these issues, you can not only identify them, but you can proactively develop ways to overcome them.
Let’s take a look at ten of the most common challenges facing family businesses today.
1. Family problems. Physical, emotional and financial problems among family members can greatly impact the day-to-day operation of the business.
2. Informal culture and structure. For many businesses, having a laid-back culture is a positive. However, the informal structure and culture found in many family businesses can equate to a lack of documentation, policies, and defined strategy and goals.
3. Pressure to hire family members. It can be difficult to resist the pressure that comes along with requests from family members who want to join the business. This becomes especially complicated if they lack the basic skills and experience needed for the position.
4. Lack of training. The informal culture found in many family businesses can result in a lax approach to training new employees, whether they are family members or not.
5. High turnover of non-family employees. Non-family employees may feel that greater opportunities exist within the business for those who are a part of the family and may grow tired of the culture.
6. Sources for growth. A huge challenge for family businesses can be determining where and how to get the capital and resources needed to grow the business.
7. Lack of an external view. While family members may not always have the same opinions, they often have similar upbringing and life experiences which may lead to a uniform view of the business. Businesses need to have external views of their company and their competition in order to thrive.
8. Misunderstanding the value of the business and how it is to be divided. Owners of family businesses may have varying opinions on the value of their business, or even worse, they may have no knowledge about the value of the business and what things contribute to or detract from that value. Further complicating this matter is determining how to split the profits of the business or owners’ stakes
9. Who will take over the business? It is important for family businesses to plan ahead for business succession. Many family-owned businesses do not have a plan in place and this can be a source of heated debate and intense family politics when the time arises to select new leadership.
10. No exit plan. Family businesses often lack a defined strategy for what will happen if an owner wants to retire, sell the business, or transfer responsibility. This goes hand in hand with succession plan issues. All businesses need a plan for the future.
What challenges do you face in your family business? Or, have you faced the challenges above and succeeded? What worked for you and your business? We would love to hear your insight and experiences.
# Family’s internal issues
# Business ownership equations
# Business Management challenges – Unclear Roles & Responsibilities
# Leadership succession Issues
Solution to conflict
§ Family constitution
o Formation of Company’s policy
o Ownership structure
o Role of each family members
§ Family Council
§ It’s a type of supervisory Board comprising of Family members to govern the Business
§ Family council is the main guiding force for Business
§ Who will be leading the Business after senior man will retire?
§ Many Business owners do not give serious thought to the succession planning
§ Some wants to handover to eldest but that does not work. It has to be basis of Talent.
o Succession planning has to be written and agreed by family council to ensure that no dispute arises later on
Guidelines for balancing family
§ Separate Biz and Family
§ Develop a culture of transparency
§ Manage Egos
§ Provide operational freedom
§ Evaluate objectively
§ Ensure single minded Leadership
§ Promote Merit
Tips to make your family-run business thrive.
1. Play to each family member's strengths. Establishing boundaries and having clearly defined roles, responsibilities and authority can determine whether a family business will succeed or fail. "In a family business, order is even more important than it is in any other kind of business because you have two things that pull at you constantly," she says.
2. Keep personal matters out of the business. Family members typically have insight into each other's personality and thought process that non-related business partners wouldn't have, making crossing the professional line into personal terrain tempting. While lashing out at a co-worker wouldn't have been thinkable in her corporate positions, it's easier to lose your cool when there's a personal relationship involved. "You say things to your parents that you wouldn't say to anyone else,". Leave your emotions at the door and remember your family members are your co-workers when you're at the office.
3. Be understanding of the generational divide. While new generation and older generation have a great relationship, both agree the generation gap can create some tensions. "Older generation still uses a 1950s typewriter to print invoices, so sometimes he has to do it five times because he misses a letter and I ask 'why don't you just do it on the computer?'
The generational differences can create some challenges, but younger generation appreciates the wisdom her father brings to the business and says the old and new ways of doing things create a balance that clients find appealing.
4. Separate personal from professional time. While ideally acting as a family at home and professionals at work, most family-run businesses operate on both levels at all times. "The business has to be run in a different way than the family is run.
Dr Praveen Srivastava, Business Coach, Management Consultant : www.praveencsrivastava.com