As family businesses continue to be mainstays in virtually all parts of the world, owners of family businesses need to be prepared to handle the unique problems that can arise in a family business environment. Below are the top 5 challenges you can expect if you run a family business.
1. Stark differences in goals or vision. When one family member values profit margin above all else and another family member believes in going to any expense to keep customers satisfied, the stage is set for a conflict at the office. Family members should strive to agree upon common goals for a business in order to avoid confusion and a lack of direction within the workplace.
2. Desire to maintain tradition may outweigh the need for change. Some family businesses are marked by the continued use of the same operating procedures – including procedures that are severely outdated. The refusal to deviate from long-standing operating practices can hinder a company’s ability to thrive in a competitive market.
3. Poorly defined work roles. Many family-owned businesses are characterized by a lack of clearly defined work roles and responsibilities. While the nature of some small businesses require family members to perform a variety of different tasks, owners of larger family businesses should strive to ensure that each employee is aware of his or her job responsibilities.
4. The potential for a “one man show” leadership style. Some family business owners cannot resist the urge to try to control all aspects of a business. Learning to relinquish control and delegate responsibility to others is one of the best ways of avoiding this pitfall.
5. Compensating all employees fairly, including family members. The perception that family members are being compensated at a rate higher than market value can cause problems between family employees and non-family employees. One potential solution is to base compensation for all employees on their performance.
Clearly, owners of family businesses face a host of different challenges while operating their businesses. Developing an awareness of these challenges is the first and most important step in successfully preventing them from arising.