Sharing a business with family may seem easy, but managing it is not without its challenges. In the United States, more than 70% of this type of business disappears without having reached 25 years of existence, due to the fact that the education and training of the next leaders are not given importance.
However, the characteristics of a family business provide several benefits, so this time we will talk about them, as well as their main problems and what are some of the keys to overcoming them.
Table of Contents
What are the advantages of a family business?
Its stability allows for strengthening its own work culture
One of the main characteristics of a family business is that there is greater longevity in leadership, with retirement being the main reason for leaving a managerial position. This situation allows the development of their own work identity and gives continuity to a business strategy, which usually helps in times of crisis.
A higher level of engagement
Since the business represents the livelihood of the family, there is usually a greater commitment. However, it is necessary for its members to have adequate preparation about the industry and the way in which the administration of the family business works so that it does not fail. In fact, only about 23% of family businesses have a succession plan, so early training is necessary.
Role flexibility
Another advantage of a family business is that members are willing to assume various roles to ensure the operation of the business and lower costs. This point is particularly crucial in times of economic recession since they will be willing to reduce their salary and even contribute capital.
Long-term perspective
Family businesses tend to be more forward-looking. Its members are more patient and have a greater long-term perspective, therefore, there is the possibility of making less hasty decisions and developing better strategies, which span several years.
Also read: How to manage the debts of a business?
What are some difficulties of the family business and how to face them?
Each family generation has to reinvent itself
It is quite a challenge to learn how to make a family business that lasts for several generations, especially when the life cycles of companies begin to be shorter. Now it is likely that, when the new generations join the company, the business model will already be in decline, so it is necessary for them to develop a greater entrepreneurial culture in order to reinvent the company and boost its growth.
Family problems
These types of companies tend to suffer from family conflicts, which are usually long and, therefore, complicate the functioning of the organization. The important thing, in this case, is mediation, surrounding yourself with advisers outside the family so that they provide a more neutral vision, as well as creating protocols, agreements or family assemblies where these types of situations are dealt with, and the boards of directors are only left to strategies and monitoring of business objectives.
Unprofessional organization
Another common problem is involving a large number of members in the management of the family business. Although support is always sought, it is important to choose only those people who really add value to the business. In addition, this will help to avoid conflicts of interest. The more professional the selection of managerial, executive or managerial positions, the more growth opportunities there will be.
Now that you know how to run a successful family business, you just need to carry out an adequate succession plan and create innovative strategies that help boost its development generation after generation.