The 5 Biggest Challenges Faced by Family-Owned Businesses
What are some of the challenges that family-owned businesses encounter? The article will discuss some of these challenges and how they can be overcome. Family-owned businesses have had to overcome their fair of challenges over the years. The top 5 of these include:
1. Lack of succession planning
One of the biggest challenges family-owned businesses face is deciding who will take over when the original owner retires. If you don’t want the business to be sold, a plan needs to be in place for management to step into the role. An entire family shouldn’t run a business, but rather a specific person should be selected for that purpose. When someone is chosen, they need to be adequately trained to step into their new role seamlessly after their predecessor has retired.
2. Pressure to hire from within the family
The family members who own the business may feel pressure to hire. This is a perfectly acceptable practice. However, they must find someone they believe will operate the business effectively, regardless of their background. It’s also good to hire an outsider when possible to provide an objective viewpoint into how certain decisions are made.
3. Conflict among family members
Conflict can be detrimental to a family-owned business if it is not managed effectively. The family members involved should discuss what the conflict is about and how to resolve it. If they can’t work it out, you can hire outside people who have the skills and experience required. When the conflict can’t be resolved, the best option is to sell the business or find a trusted outsider to run it.
4. Poor communication with employees and customers alike
Lack of communication is one of the biggest problems for family-owned businesses. If the people involved in running the business can’t effectively communicate with each other and with their employees, their growth will be impacted.
It’s important to make sure that you have systems that allow for greater communication and transparency among the people involved with your business. This will lead to a stronger brand and better financial results overall.
5. Involvement in business activities of non-family members, which can be detrimental to the family’s business.
In today’s world, family-owned businesses have to be concerned with Family Interference. Family Interference occurs when non-family members involved in the business try to influence family members through manipulation and deceit. This can be detrimental because it can lead to a loss of focus on the primary goal of the business. Family Interference can occur at any time; however, it is more common in the years leading up to and during business succession planning.