Family business success is a noteworthy goal that can equate to more freedom and stability for generations to come. But, as with any startup, there’s a risk of failure. Even family businesses that have been around for decades shut down. You want the money-making endeavor you made for your loved ones to be around for the long run. How can it happen?
There are endless variables that contribute to the success or failure of any business. These variables, moreover, can vary by business industry, size, structure, and so forth. Still, there are a few things that all family businesses have in common. All else aside, these commonalities and the management of them can help to predict family business success or failure.
1. Alignment of Personal Visions
All too often, someone starts a business and expects that business to become a family business but neglects to consider the personal goals and dreams of the members. To the business leader, what they’re building is so smart and worthwhile that any visions the members of their family have for their own lives are deemed irrelevant. It is assumed, even demanded that the members put their own hopes in second, third, or even last place. It’s just not a good foundation for building long-term cooperation.
2. The Merging of Family and Business Cultures
Every business has its own culture, as does every family. And each has its dynamics. Gaps between the two can spell trouble for a family business. The shortfalls of either can affect the other. It may be necessary to heal relationships between family members outside of the workplace to ensure strong teamwork within it. Likewise, it’s important that business challenges be met with a solid, united front and not allowed to undermine family bonds.
3. Grafting in Hired Help
The number of participating family members may not be enough to fill all the positions of the family business. In fact, non-family staff members may prove vital to family business success. These employees must be made to feel fully part of the team and not in anyway lessor because of their origins. If not, there can be breakdowns in key success elements such as communication, collaboration, and productivity. Make sure that every person on your team feels valued.
4. Fair Human Resources Policies
The handling of hiring and firing family members can be a big issue. Though family business success is rooted in the competency of all participants, emotion and loyalty can undermine the ability to build a strong team. It can be hard, for example to fire a sibling, parent, son or daughter. Likewise, it can be difficult to let certain members of the family play key roles, despite their professional expertise, when you’re all too familiar with their past personal challenges. Make the human resources policies of your family business are clearly defined, fair, legal and unbiased.
5. Selection of the Successor
Establishing business succession is important in any business meant to last and particularly vital to long term family business success. If the business is to serve as a legacy it must remain in existence for the generations that are to come. Loss of the leader can lead to the end of the business if a succession plan isn’t put in place. Business succession planning can be a difficult task to tackle for family business leaders who never envision themselves retiring and don’t want to consider their own demise, but its importance cannot be overemphasized.
A family business can be a powerful way to unite the members of a family and ensure the financial well-being of all, but how it’s managed will dictate whether it succeeds and lasts. Indeed many factors influence business longevity, but some elements are especially important for family business success.