Running a family business can be rewarding. It offers a common purpose that family members can pursue, bringing a family closer together. Family businesses are known for their flexible management and informal communication. Given the unique dynamics surrounding them, family businesses are prone to challenges that other types of organizations aren't.
Many business leaders struggle with life-work balance. The struggle can be more pronounced in a family-owned business. It can be hard to draw the line between work and family when you and your spouse or children work along side you, and all you can do at the dinner table is talk business.
Individuals should limit business talk outside the office to establish strong family-work boundaries. If a business idea or concern can wait, let it. Not bringing work home also helps resist the pull to discuss business at home. Having a separate email and phone number for work helps maintain a clear line between work and family.
The relatively informal nature of family-owned businesses offers much-needed flexibility. However, such a arrangement can expose a business to various challenges. It can blur the lines between birthright and employment status, making objective remuneration or compensation hard to achieve. Without clarity regarding compensation, business suffers, as do family relations.
A strong governance structure that outlines everyone’s roles helps prevent confusion and power struggles. It also streamlines decision-making while ensuring accountability. Clear and consistent policies on performance and expectations help maintain a healthy culture. This also ensures everyone is pulling his or her own weight and that family members aren’t getting preferential treatment at the expense of non-family employees. Documenting agreements also helps prevent misunderstandings.
Most family business owners hope to pass their enterprises on to the next generation. However, the transition can be challenging. Conflict may arise over leadership succession. In addition, the next generation may be uninterested or ill-suited to take over.
Nurturing children and involving them in the family business early on can help cultivate interest. Making family members earn their positions by having them invest their time, expertise, or money may also get them to care about the business, as opposed to giving them positions simply because they’re family members.
Keeping personal family issues out of the business can help avoid many challenges associated with operating a family business. Having separate forums for business matters and family issues helps prevent spillovers.
Family conflicts and lack of structure pose a significant risk to family businesses. Conflicts threaten continuity and damage reputation. For example, many customers will avoid dealing with a company that is known to be having serious management or ownership difficulties.
As such, the structure of a family business matters, as does the vision around which the business is built. Cultivating a compelling, long-term vision helps get the best out of family members, as they’re more likely to prioritize the good of the company over individual interests.
Family businesses have unique dynamics, from competing interests and ideas to power struggles. Moreover, personal conflicts can spill over into the business. Without clearly defined structures guiding the business operations and conflict resolution, misunderstandings can impact operations.
