There are several examples of family businesses, the successful ones and the ones that ended in disaster. There are several difficulties when running a business with family members. Sometimes family businesses end up in legal battles, rivalry, bitter relationships. On the other hand, there are examples of successful business houses run by the same family for generations.
The secrets of a successful family business
The leaders of a family business start preparing early for transferring the leadership qualities within the family. The success of many family run businesses over generations is the result of their thought process. The advice for the younger generation is that the sooner they start the better it is would be. Of course, it does not mean burdening them with the workload or responsibilities early in life. Training the young minds is easier, as their tenacity is greater.
It takes time to build the leadership qualities, not everyone has these skills naturally. The leaders of a successful family business want the business to stay in the family, at least majority of the times. Different roles for different family members are identified, and they are groomed accordingly.
There are several advantages in the family business. For example, the younger people are given an ear, which is missing in several other organizations. Also, if a member is not suited for a particular role, his area of responsibilities are changed to his liking. The attribute most common in successful family businesses is mutual trust.
The younger generation is more energetic and is able to handle more responsibilities. Although, different roles are assigned to the various members, all members can contribute to the success by giving their inputs on almost all aspects.
To stay ahead of the rivals, the senior members have to device strategies. Innovation is the key to growth, which generally the young members are good at. The young minds want to be involved in taking the company forward and are eager to perform. Together as team, they work for being ahead in the race.
How to avoid conflicts in a family business?
It must be ensured that the goals and objectives, whether long term or short term are defined to every partner. Each individual should know his or her area of responsibilities without any ambiguity. Since each one has a role assigned, interfering in the other’s domain is not a good idea. Unless, of course asked for inputs. This would help in respecting each other’s decisions and solving issues arising within the organization.
There is always a possibility of conflicts. The overall productivity decreases as a result of conflicts. Steps need to be taken in order to prevent such issues and it is a must to resolve them quickly. Assumptions would lead in the wrong direction, clarity on the expectations should be on paper. A written memorandum defining the role and responsibilities of each partner should be handed over to each member.
Communication amongst the partners should be quite often. Many times lack of proper communication can lead to conflicts. Being open will help, but one must understand that formal conversations should be encouraged to bring in discipline. Work time should not be mixed with family time and vice versa. Talking about business all the time might even ruin relationships.
There is absolutely no harm in making formal written agreements. Rather it would bring more transparence in business and boost the confidence of all partners. The help of professionals like lawyers, consultants, accountants etc. is necessary. To run a business successfully one must be aware of the current laws and regulations. Government makes changes in some of these regulations sooner or later. Professional help will keep the business on track and adhere to the amendments.
There is an exceptional pride in running a family business. Being able to continue the legacy through innovation brings a great deal of satisfaction.