Every business has its own share of challenges and hurdles to face. They could be related to economic environment, finding the right kind of talent, arranging finances for expansion and growth, ever increasing competition in the market, etc. Similar challenges are also faced by family owned businesses and they also have their own set of situations to face. Some of the major issues faced by them are discussed below.
Absence of Succession Plan
Generally these businesses are setup by one of the family members and most of the responsibilities of the business are handled by that person. Most of the family businesses are not able to transition from one generation to another. The primary reason is the absence of a succession plan; the next person in command is seldom groomed for that role, many a times the next generation person is not interested in continuing the business or taking that responsibility.
Another major issues face by family business is the family differences and conflict spilling on to the business front and they are not able to separate their personal relationships from the professional. Most of the times it leads to split in the business or incorrect succession planning and may eventually lead to business loss and closure.
The entire setup is not that much professional. This informal culture in the organization lead to people taking their places for granted and they seldom indulge in skill enhancement or going for a professional training to increase their efficiency.
Lack of Interest of Non-family Employees
The scope of growth for the non family employees is very limited in most of these businesses. There is also a glass ceiling which exists for them and this lead to dissatisfaction among them. Some family members also restrain themselves from training the non-family members about the tips and tricks of the trade fearing competition from them and this leads to in efficiency and lack of trust among each other.
The major issue which these businesses face is the arrangement of funds for growth and expansion. It is difficult for them to find the source from where they can get the capital to expand the business. Sometimes it also happens due to differences in opinion of the persons who have control over finances.
When you allow the emotions to take over while taking the important decisions related to the business then it may affect the business in wrong way. You might not be able to take the hard decisions required for the survival and growth of the business.
Lack of Professional Approach
Business needs a professional approach to succeed; you have to consider the mechanism of the market, competition and own efficiency to stay relevant and progress. Mostly this is not taken care of in the business. They also do not have any exit plan ready in case of a failed strategy or difference of opinion among the owners.
In spite of the above issues related to the family businesses there are many such businesses which are thriving in the market. The difference is they are running it like normal businesses; they are hiring the best talent available in the market to take care of the business as well as training and honing the skills of the heir apparent.