While there are many benefits associated with running a family business, this type of firm also has its unique set of problems and challenges. People often like doing business with family firms, as they feel they get a more personal and attentive service. Moreover, it’s nice to keep things in the family! However, if you want your family business to be passed down for generations and generations to come, you need to make sure that you manage the unique challenges that are going to come your way. Read on to discover more about some of the most common challenges faced by small family businesses, as well as advice on how to overcome them.

Staving off resentment

Resentment can arise when employees are treated differently. You don’t want those who come from outside of the clan to feel alienated. However, this can easily happen when family members are favoured or get privileges. You need to make sure that all employees are treated the same. There should be no special privileges, such as extra days off work. Moreover, you should not place family members in a position they are not qualified for. If you have someone in your business that has all of the necessary qualifications and skills for a promotion, yet you put a family member in this job role that has little experience and no qualifications, you are going to create resentment in the workplace. You are also going to hurt your business in the process too. If you want your family member to take on a high position in the company, they will need to work their way up and go through all of the necessary training, as everyone else has had to. By doing this, you will get the respect of everyone in your business, both family members and non-family members.

Family members remain in silos in accordance with bloodline

One thing that you will notice about a lot of family companies is that the children tend to specialise in the same areas of the company as their parents, whether this is marketing, operations, or finance. There are a number of reasons why this can cause issues. The first reason is that candid feedback is often not provided when family members supervise each other, and this can get in the way of effective coaching. In addition to this, next-generation managers do not get the cross-functional expertise that they need for executive leadership because they stay in specialised silos. All in all, this will limit the ability of the company to adapt changes in the industry, as the current generation will remain in the top positions for too long. The best thing to do to avoid this problem is to employ mentors from outside the family.

The company can’t grow at the rate required to support everyone

One thing that a lot of people do not realise when setting up a family business is that it is highly probable that the family is going to grow quicker than the company will. People marry into the family, and, of course, there are children to consider as well. You may not have enough positions available at the company to help everyone that needs it. However, remember, you have not set up your business to be a charity for all family members. You need to run a financially successful business, after all a business is only a success if it makes money and if you put the family before the key aim of making money then you will not provide a secure financial future for them. Even worse, the company could end up in debt and that won’t be good for anyone in the family; if you find yourself considering taking out a loan to prop up the business so it can support all family members then you need to reconsider. The way to a financially successful business is to make sure that you only allow qualified and committed relatives to join your company. Moreover, you can put strategies in place to grow the company and create new responsibilities for additional family employees. But, do not simply create roles for the sake of it – make sure you are actually growing your business!

Unqualified family members taking up key roles in the business

A lot of family businesses allow family members to take up a role in the business simply because of their family status and their family status alone. However, if you do this, then you are going to end up with unskilled, unqualified, and inexperienced people in key positions at your business. Anyone running a small business knows that one of the best pieces of small business advice is to employ the right people. Again, as mentioned in the prior point, it is imperative that you insist on proper screening and training. You should scrutinise your family members just as carefully as you would non-family members during the hiring process.

Creating a succession plan

Creating a succession plan can be exceptionally difficult for family businesses. There can be a clear conflict of interests between the child or other family member that you want to carry on your business for personal reasons, and the person that would actually be best to carry the company forward in the future. The best thing to do is to create a succession plan as early as possible during the life of your business. You should identify all of the people that you believe have the qualities to stand in your shoes. Remember, they are unlikely to be ready to do so yet, but with careful training and mentoring, they will be more than capable of running the show when the time comes. If you really want your son or daughter, or another special family member, to take over, you need to arm them with all of the tools and training necessary to do so. If, after time, you are not convinced that they are going to be capable of running the company, or you feel that their heart is not in it, you need to be honest with yourself. There is no point in putting them in charge if they are going to run the business into the ground. This does not mean that they cannot take on an important role in the business, but you should at least prepare others for the leadership role in case your child is not ready to take over the firm.

Failing to consider outsiders

A lot of people open up a family business and intend to keep it strictly in the family. However, you are advised to make room for outsiders. If you have such an inward mentality, you are limiting your company and placing too much pressure on your family’s shoulders. After all, they may not have the skill or even the time to commit to everything the business requires. It is highly unlikely that family members are going to be able to provide all of the knowledge and experience that your company requires. With the right balance of outside knowledge and the unique dedication of your family, your business truly will succeed. Remember, a company cannot survive unless it has the best possible people in each position. Plus, after some time, it is likely that these employees will grow to become part of the family.

A lack of structure

A lack of structure can be a real problem for family businesses, as the lines are often blurred regarding who is in charge of making key decisions in various departments and for the company as a whole. Siblings can end up second guessing one and other, and parents can overrule children, even if they technically are not in the position to do so within the firm. To combat this issue, you should set up formal lines of responsibility, and make it top priority to ensure that everyone sticks to them. Make sure that all employees treat each other with the same level of respect, whether they are family members or not.

Family problems affecting the workplace

In addition to the points that have already been mentioned, another thing that regularly happens when it comes to family businesses is that family issues are brought into the workplace. When family members are fighting, or there are tensions outside of the workplace, they can often be brought into the work environment. This can have a negative impact on the atmosphere, as well as productivity levels. From the offset, it is important to make sure that family issues are not discussed in the workplace. All family related matters, whether good or bad, should be left at the door every morning. It is also a good idea to avoid talking work-related matters when outside of the workplace. This will help to make sure that family and work life does not impact one and other.

Losing non-family employees

Do you find that you keep employing non-family employees and they just don’t stick around long enough? This could lead you to assuming that workers nowadays simply aren’t reliable. However, there are generally two reasons why non-family employees will leave a family-run business, and these are as follows – family conflict, and limited growth opportunities. We have just discussed the importance of ensuring family conflict does not overspill into the workplace. However, it is important to make sure that non-family members get just as many opportunities to grow and develop as family members do. At any company, a person desires to advance within the firm and better themselves. If they feel this is not going to happen, they will look for opportunities to grow elsewhere. Often, in family-run firms, family employees occupy all of the leadership positions, and this means that opportunities for advancement are severely limited. This causes the most ambitious and talented employees to move on. It is vital to recognise that, if your business is to grow, you need a good mix of people in all of the senior positions. Having non-family employees in leadership roles will add balance to your company. They will be able to make decisions from an unemotional position, which can be of critical importance. Make sure all non-family employees have ample room to grow within your firm.

Letting your emotions take over and run the company

We have all heard the saying “it is not personal, it is business” – however, it is always personal in family business. This can make it very difficult to separate your emotions from the company. But, you need to find a way to do so; otherwise it is going to be hugely detrimental to your business. There is no doubt that family members are going to find it hard to take criticism from someone they love. But, if you do not give this constructive criticism, no matter how hurtful it may be, you are jeopardising your own position at the business. You will put yourself in a place whereby your ability to make sound decisions is severely compromised, and you will make yourself appear as a weak leader. Not only will this be in the eyes of your other employees, but also in the eyes of your customers as well. It is all about finding the right balance. Some people are at the other end of the spectrum; they think they can say whatever they like to the person in question, no matter how hurtful it is, because he or she is a family member. However, you need to ensure you are sensitive when broaching such topics.

Family feuds

Earlier, we spoke about family matters impacting work life. But, what happens when family members actually aren’t speaking to one and other? What if the feud is so significant that you end up with two family members, if not more, who won’t speak to each other in the workplace? If this occurs, you will find it impossible to achieve business goals. This can create a work environment that is hostile, impacting all employees, and resulting in an increase in employee turnover, and decreased profits. If you cannot find a way to resolve the conflict, you may need to think about letting those family members go for the sake of the work environment. Or, you could suspend them until a resolution is found.

As you can see, there are many unique challenges and complexities that relate to running a family business. However, if you know how to handle these challenges effectively, you can stop them from becoming an issue at your business. Remember, while you are running a family business, it is still a business at the end of the day, and it needs to be handled in this manner.

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