How To Run A Family Business
Did you know that only 1 in 3 family businesses survive to the next generation?
Many family businesses struggle for a variety of reasons. The most common reasons are the overlaps and the struggles of maintaining an optimal balance between personal and professional life, the difficult hiring process, as well as the lack in business materia among the family itself.
Running a family business requires discipline, planning, and recognition. Family relationships are fragile in the business world, and they need to be a bigger priority than anything else. And this is where multiple problems can occur. An inability to focus on business because of frequent emotional interferences is proven to be one of the main reasons why most family businesses fail.
However, while running a family business has its own risks, with the right mindset and approach, it can be a life-changer for many entrepreneurs and managers.
In this article, our co-founder and experienced entrepreneur, Daniel Hedlund, shares his thoughts on setting up a family business online.
The Advantages Of Running A Family Business
Starting a family business is pretty easy – you already know one another’s strengths, weaknesses and passions – and with the probability that you came up with the business idea together being high, you’re already dedicated to the idea and ready to make your family business very successful.
Not to mention that working with someone you already know well can be very fun! With friends and family, you can skip the whole “getting to know each other” stage, and jump straight into the nitty-gritty of the work you chose to do together.
Your relationship also sets the tone for the business. You can work together to create a fantastic company culture, taking previous work experiences (both good and bad) to sculpt business ethics and directions you together want, making your family business that much better.
And there is so much commitment in a family business! It is all about your prosperity. If business is going well, then the family will also prosper, thus resulting in highly motivated and hard-working people, successful both in professional and personal lives.
However, if it comes to the situation where the family business is temporarily slowing down, family members will be motivated to work together and invest more time, energy, and money in order to ensure the long‐term success of the company.
Family commitment leads to better understanding of the industry, organization and job, effective sales and marketing and great customer relationships.
Another advantage of running a family business is flexibility. It’s much easier to talk with, and make arrangements with family members. You could skip all of the awkward situations and conversations, knowing that you are surrounded by people among whom you feel comfortable around.
The Disadvantages Of Running A Family Business
As we mentioned a few cons of running a family business before, family businesses also have their own disadvantages. Perhaps the most challenging aspect of entering this type of business is creating and maintaining a level of professionalism.
A family business only works if you draw a clear line separating personal from professional life and if everyone respects each other. Ensure that your business model and any legal agreements are created with the mindset that you are business partners, not friends and family.
It is very important to define exactly what type of business your family is in and to develop a business plan and implement a business strategy around your family values and vision. Then focus on clear expectations and agreements, define job titles, job description, performance standards and make it as professional as possible.
It often happens that family members aren’t really interested to join family business, but they are forced because it’s expected of them. This can lead to a huge problem both for business and family relationships.
Another potential problem can be family rivality. Sometimes, it might occur that relatives become a bit competitive and jealous of each other, and start blaming each other for different things in order to make up for their own mistakes. This is where rivality steps into the scene, hindering the business for further growth.
However, not everything is black and white. For example, if all goes well in the family business, you will be able to enhance your business and hire additional non-family employees, which will only bind family member closer.
Additionally, when you start a new job you are typically given a coach or mentor. However, that is not the case when you run your own business or a family business – you’re kinda on your own. The lack of time to help can lead to lack of few skills and experience, which can further lead to high levels of stress, potential business failure and broken relationships.
To fill any skills gaps without committing to the cost of a full-time employee, business owners should seek expert guidance outside their organisation. You can also consider hiring a freelancer for some jobs you don’t have enough expertise.
Whether it’s speaking to an alternative friend, an old colleague, or using one of the many “gig-economy” platforms to find people with the expertise you need, there are ways to overcome this obstacle without parting with vast amounts of money or importantly, risking relationships.
Speaking to an external mentor about your business needs can help resolve obstructions to development.
Our advice for family business owners is to look online to find someone, perhaps even from a different country, to simply help navigate and recognise problems and be a sounding board for potential business ideas.
As you can see, family business struggle for many reasons, and the statistics reveal that ninety percent don’t survive to the third generation. On the other hand, these statistics are actually good, because family businesses survive with a higher rate than non-family business.
You must have hear of Heineken, Nike, IKEA and Toyota. All these companies and many others started as a family business and now are globally successful.
No matter how talented and experienced you are, every beginning is hard, and it applies in running a family business as well.
The first few months can be really hard, but with the right people, right mindset, and clear vision, you could minimize the potential downsides of running a family business, and actually create a fantastic thing, that will you and your family both be grateful for in the long run.
So, if you’re about to take the plunge with your friend or family member, go for it.
Just remember that you if you find yourself stuck, or in a need for a professional help, you can seek external advice in order to achieve success.
With that said, our online learning platform – Zeqr offers various classes and courses on the subject.
We hope to see you there!