Every business has certain kinds of challenges and threats that are needed to be faced by the business at some point in time. These challenges could be related to technical operations like cash flow issues, fluctuations in the market or securing the amount of capital. There could also be trivial issues related to the everyday operation of the business. The challenges faced by a family business are very specific and require unique solutions.
When it comes to a family business, emotions get involved with the workings of the company. As the people in the hierarchy of the company are related to each other by blood, it makes the functioning of the organisation more complex. Let us look at some of the common challenges faced by family businesses and how to overcome them.
1. Compensation:
One of the biggest challenges faced by a daily business is related to compensation. Certain members work more while others are working less as compared to the hard-working people. The compensation is imbalanced in a family business also because the family members are preferred to be paid more than the non-family staff that works much harder.
The compensation must be fixed according to the work done by the member and it should not be provided depending upon the relationship of the members within the family.
2. The multi-generational issue:
In a family-run business, there are multiple generations of members working together to operate the business. There are conflicts among the generations regarding various issues. The younger generation wants to equip the business with the latest technologies while the older generation members try to resist these changes to maintain the traditional business practices.
These kinds of generational problems can be solved if the members from different generations are open to new ideas and also realise the importance of traditional business practices to grow their company.
3. Resistance to hire outsiders:
The family businesses grow to a point where the business owners do not have the ability to run and manage the business on their own. Yet the business members resist the involvement of outsiders in the family business.
When a business reaches its height, it can’t be managed by the family members based on their limited skills. The business owners must accept this fact and should be open to hiring experts from the fields of management, finance and other departments that can handle their expertise areas with efficiency.
4. Decision-making issues:
The organisational and operational roles in most of the family businesses are not explicitly stated. This leaves room for bad decision making. The business is operated without laying down a business plan or any ground rules for the operations. The lack of assigning specific roles to individuals leads to decision-making issues in the family business.
This issue can be tackled easily if family businesses start assigning roles to each member and help compensate them according to their role in the company. This can save the company from a lot of trouble.
5. Mixing of professional and personal life:
When family members work together in a family business, the lines between the professional and personal life start fading away. This leads to complexities in both professional as well as personal life. The business talks take place throughout the day even when you are on a vacation or attending a private family function. This results in burnout for certain individuals as nobody is capable of talking about business issues all the time. It should be avoided at all costs and a balance between work and life should be maintained.
There is no doubt that family businesses face quite unique issues. A family business owner can however learn to fight these issues. Kin & Kith is an organisation that familiarizes family businesses with various professional practices through its courses. With Kin& Kith, you can learn about the dos and don’ts of any kind of family business easily.
By Ajay Data, Founder and CEO Data Xgen Technologies