Family businesses typically achieve more success than non-family businesses. However, that doesn’t mean that it’s all smooth sailing for every family business. Apart from business-related challenges, families also have to keep their interpersonal relationships healthy. After all, a family whose members are in discord can very rarely succeed as a collective that runs a business.
In this blog, we will take a look at five of the biggest challenges that family businesses may encounter. We will also discuss the steps that families can take to overcome these challenges and keep their respective businesses heading in the right direction. So, without further ado, let’s get started.
Keeping personal and professional lives apart
This is undoubtedly the biggest challenge for a family business. As the members of a family business know each other personally, it can get quite challenging to keep out personal judgments and prejudices when it comes to purely business-related discussions. Heated arguments and fights on a personal level may start seeping in through the cracks if there are discords and disagreements on the professional level as well.
The ideal way of dealing with this particular challenge is to draw a line between personal and professional relationships. To ensure that all the members of your family are respectful of each other, you should encourage your family to spend more time together. At the same time, also maintain some distance with your professional lives. For example, when celebrating a festival, don’t bring up business-related discussions. And if family problems seem to get out of hands, seek professional help through a recommendation or a platform like ReGain.
Setting the right standards and sticking to them
If your family business consists of more than two or three people, there may arise situations when leadership positions are disputed. Usually, family businesses that involve few members don’t face this issue as there is generally a mutual understanding that all business responsibilities have to be distributed fairly among all partners.
However, if there are more than three members, things can get complicated. How do you make someone a leader of the marketing department without the appropriate qualifications? And if you do, won’t the other members raise questions regarding the decision?
To avoid such scenarios, you should set standards and ensure that everyone in the family should adhere to them. For example, someone who aspires to be in the business in an administrative capacity should be encouraged to pursue an MBA (Master of Business Administration) degree. In this way, you can also guarantee quality for the business going into the future.
Compensating everyone in a fair and unprejudiced manner
Let’s face it; if the business has many family members, it will not compensate everyone equally. Some will get more and some will get less. In such a situation, resentment may grow among those who feel they deserve more concerning how much they have put into the business.
To keep things fair, you should always compare salaries with the amounts that are paid in the open market for similar positions. It doesn’t simply end by determining the right compensation amounts either. You also have to discuss matters such as how additional profits would be split and what the agreement would be in case special financial considerations arise.
Lacking the third-person perspective
In a family-run business, there is no external perspective on business-related matters. All ideas, opinions, and views are confined to the members of the family, and this can seriously restrict the growth of the business.
For the right advice from an external source, it’s best to hire a reputed business advisor. By listening to the inputs of an external party, you can gain a much clearer insight into your family business.
Not planning for the long-term future
If your family business is doing well today, great going! But does it mean that everything will stay the same forever and after? The right answer is no. Change is constant, and as the eldest members of the business grow older and eventually step away from the business, their absences will need to be fulfilled by members of younger generations.
But who comes in as whose replacement? And will the new person be able to step into the shoes of the previous member? These are uncomfortable questions that family businesses shy away from. But if you want your family business to become an empire, you have to ask them and keep asking them until and unless you find the right answers.
While these challenges can undoubtedly be big, with the right attitude, you and your family can definitely overcome them in the best interests of your business.