family owned businesses

The Challenges for Family Owned Businesses

Every business organisation has a unique set of challenges and problems. It's tempting to believe the family owned and managed business (FOMB) is a better business as the level of commitment and flexibility is perceived to be much greater.

However, family owned businesses are "20% less productive than others" according to the Office for National Statistics as reported in The Daily Telegraph (7th April 2017).

Family businesses go through various stages of growth and development over time. Many of these challenges will be found once the second and subsequent generations enter the business.

Does your FOMB suffer from poor productivity?

Maybe your business faces some of the following six challenges experienced by some FOMBs:

A Lack of Structure and Formality

There is an absence of clear policies and procedures so the business relies on the goodwill and common sense of family members and the rest of the team. There is little standardisation so productivity suffers and the customer gets a mostly good but inconsistent service.

High Turnover of Non-Family Members

When employees feel that the family “mafia” will always advance over outsiders and when employees believe their opportunities to advance are limited.

No Organisational Strategy

Roles and responsibilities are poorly defined; many roles exist because a family member was employed to do whatever they were good at as opposed to what the business needs. Growth becomes challenging because the required skills, knowledge and experience may be absent in the business as is not moving people on who are not 'up to the job'; it sends a message that mediocrity is acceptable.

Lack of Written Strategy.

There is no documented plan or long term planning as everyone believes we are all working to the same goal when in reality, each family member has a different vision for the business! The old cliché of 'no-one plans to fail but many fail to plan' is too often true. The result is confusion amongst the team resulting in unnecessary frustration, and inertia. A SOAP (Strategy on A Page) can be created after a few planning sessions providing clarity for all within the business.

Succession Planning.

Most family organizations do not have a plan for handing the power to the next generation, leading to great political conflicts and divisions.

Too Risk Averse.

Often, it's easier to avoid change for fear of upsetting some family members as there are risks and costs associated with change but they are far less than the long-range risks and costs of comfortable inaction. This can be overcome by having a non-family member initiate and facilitate a discussion on the need for change and, in certain circumstances suggest the best course of action and to agree on the decision making process.

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