Common Issues with Family Businesses & How to Solve Them
All businesses face challenges, whether this is finding and retaining employees, the changing economy, or competition. Family-owned businesses are not resistant to these and can have their own unique difficulties. Understanding how to handle these issues is important if you experience them in the future. Keep reading to find out more.
Succession Planning
One of the biggest hurdles to overcome is who will take over the business when the current leaders want to step down or cannot manage the company anymore. You need to choose a successor and prepare them for the role, which can lead to conflicts. Consulting with solicitors specialised in business succession planning is crucial to ensure a smooth and legally sound transition.
Family Conflicts
One of the unique challenges family businesses often encounter is conflicts. Defining clear, professional roles and boundaries within a family business can be troublesome, so you need to be able to keep your personal and professional relationships separate. If age or family hierarchy is used to choose roles, it can lead to the best talents being underutilised. Look at primary responsibilities such as strategy, people, operations, etc. You should define clear roles, titles, and responsibilities for each family member. External advice or mediation may be required.
Financial Management
Mixing personal and business finances is a recipe for disaster. It is challenging to distinguish what is personal property and what is business, which can raise conflicts among family members. Some members may have different visions for the company as well. Establish clear policies and any procedures separating finances – implement formal government structures, such as a board of directors with non-family members to navigate financial decisions objectively.
External Hiring
Some family business owners are reluctant to hire anyone non-related, but this can be a mistake. Failure to bring on professional managers with the skills to manage the complexities of a business can be detrimental. Where needed, bring in outside expertise and only allocate family members to jobs they are qualified to deal with. As with any business, a strong and skilled workforce is key to success, so you need to focus on building this, whether this involves hiring family members and/or external hires.
These are a few of the most common challenges that family businesses face. Running a family-owned business can be rewarding and bring you closer together, but it can also create unique challenges that can be difficult to overcome and negatively impact both the business and your relationships. This is why it is vital that you are aware of these and know how to avoid or overcome them.
