It is easy to think that business success is due primarily to such factors as effective marketing and careful planning. However, one of the most important factors to look at in determining your company's success is the 'family business' factor. It is essential to understand the dynamics of a family business so you can best utilize the strengths of them and also secure yourself from any of the challenges that may arise and threaten the stability of the organization.
In fact it is estimated that 70% of the family run businesses that fail (the average life expectancy for family owned firms is 24 years) fail because the owner/manager did not understand the dynamics of running a family business.
What is a family business? The definition of a family owned business has been the subject of much debate however for the purposes of this article I will keep it simple. A family owned business is one in which a family own a majority stake (ie.51% or more).
One of the key areas to look at when analyzing a family business is the area of conflict. With the combined emotional pressures of business goals and family issues there will inevitably be conflict in a family-owned business. It is important to educate yourself on this area as with proper guidance and processes in place, the damage that this conflict causes to your bottom line can be minimized.
Another key area to look at it is succession planning in your family owned business. Succession issues in family businesses are markedly different than in non-family businesses, especially so in an industry that is fragmented, unsophisticated, and vulnerable to powerful outsiders. It is vital to the long term survival of family businesses that the leaders engage with this issue and create a workable process around it.
Strategy formulation in a family business is another key area to look at for maximum growth and effectiveness. It is crucial to get this area right as strategy is the core building block of any company. What can happen is family based dynamics and conflicts get in the way of proper creation and implementation of strategy. It's important to not let these factors get in the way of your company implementing the right strategy if it's to survive long term.
In terms of making sure your family business or one that you work for survives the critical thing is to maintain open communication and actively plan ahead and put in processes for these issues.
Obviously the level of interconnectedness and involvement of your family (or your company owner's family) will determine the degree of importance this subject may have for you personally. However my assertion is that these are issues that all family businesses need to contend with.
In fact it is estimated that 70% of the family run businesses that fail (the average life expectancy for family owned firms is 24 years) fail because the owner/manager did not understand the dynamics of running a family business.
What is a family business? The definition of a family owned business has been the subject of much debate however for the purposes of this article I will keep it simple. A family owned business is one in which a family own a majority stake (ie.51% or more).
One of the key areas to look at when analyzing a family business is the area of conflict. With the combined emotional pressures of business goals and family issues there will inevitably be conflict in a family-owned business. It is important to educate yourself on this area as with proper guidance and processes in place, the damage that this conflict causes to your bottom line can be minimized.
Another key area to look at it is succession planning in your family owned business. Succession issues in family businesses are markedly different than in non-family businesses, especially so in an industry that is fragmented, unsophisticated, and vulnerable to powerful outsiders. It is vital to the long term survival of family businesses that the leaders engage with this issue and create a workable process around it.
Strategy formulation in a family business is another key area to look at for maximum growth and effectiveness. It is crucial to get this area right as strategy is the core building block of any company. What can happen is family based dynamics and conflicts get in the way of proper creation and implementation of strategy. It's important to not let these factors get in the way of your company implementing the right strategy if it's to survive long term.
In terms of making sure your family business or one that you work for survives the critical thing is to maintain open communication and actively plan ahead and put in processes for these issues.
Obviously the level of interconnectedness and involvement of your family (or your company owner's family) will determine the degree of importance this subject may have for you personally. However my assertion is that these are issues that all family businesses need to contend with.
About the Author:
About the author: Dr. Marc R. Dussault shares his valuable expertise on how to ensure stability and profitablity during family business succession planning within a family business. Visit his site to learn more about the challenges and solutions around company succession
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