The Top 10 Challenges Family Businesses Must Overcome

Every business is challenging, no matter the type, the trade, your location, your situation… Running a business means facing challenges, overcoming them, and coming out stronger and better equipped to face the world. Having your own business means having success, money, influence, freedom to be your own boss, but it also pulls a great deal of responsibility. And just because you have your own family business doesn’t mean it will be easy. Sure, some parts will be simpler or will go along more smoothly, but in general expect lots of trouble, hardship, and hard work.

Namely, running a family business means you have some new, different challenges. Below you can see some of these, as well as quick tips on how to handle them.

Pressure towards nepotism

It’s the same old story – a distant cousin comes to your door, his son or daughter have trouble finding work, and this cousin wants them to work for you. The issue is – 90% of the time there is a good reason they don’t have work. Take a hard stand, learn to say no, and you will be in the clear.

Family issues

Instead of keeping it at home, family drama resurfaces in the office. Sometimes you just need to blow off some steam, and not see a family member for 8 hours, while both of you are at work. It may have been a simple misunderstanding and you both need to cool off. You lose that opportunity when you work at the same place. Learn how to disassociate work from home. Focus on the work, and on professionalism. 

Things are too laid back

Sometimes people in environments like these lack the focus and concentration necessary to get a job underway. The feeling of working in a pleasant family environment might rob you all of the edge needed to really get some serious results going. It also makes it difficult giving orders and directions – hierarchies becomes odd and difficult to figure out.

Try to set very clear rules, and stick to them.

Less training

Furthermore, the informal nature of this kind of business also means that people working for you might have less formal training. A relaxed approach to work is often seen as also being detrimental to some hiring practices. Namely, hiring a person should be a very serious affair. A relaxed approach to this means you will end up with less than stellar employees. 

Similar to the previous point – have very clear requirements and rules in place for the hiring process.

Not as objective

A family business can lead to the creation of a sort of echo chamber within the company. Since you all know each other so well, you might fall into the trap of never challenging each other, of not really letting valuable outside opinion influence you for the better.

Maybe ask an outsider for his or her opinion.

Dividing the business

It’s very difficult to figure out who owns how much of a business. How much of your assets are yours, how much are of other people… To what extent do you own parts of the company? How much do you contribute, how much do others contribute. Things like these can get complicated, and it’s difficult to figure out what is fair and what isn’t.

Of course, if you have been slighted, then you hardly have any other choice but getting some professional family lawyers involved. A family lawyer might even help you figure out a copacetic solution to this situation. 

Outsiders don’t feel welcome

A very common issue in a family business is that you will most likely have an employee who is not actually family, and who does not feel welcome. This might be a simple situation of not being as close as you could and letting this person left out. Or, there might be some actual 

Take great pains to be inclusive, and to let others into the fold.

No clear exit plan

There might come a time where you simply won’t want to run the family business anymore. For that reason, your wish might be to simply leave, retire. In other situations, you could simply sell it, get rid of it. Family businesses are a bit more complicated.

Sit down with the family and draft a clear exit plan annually.

Family politics

Simple family politics, who will take over the business, who gets how much, can also cause strife and drama.

No honest plan here – try to raise decent children, and be clear on your, and their wants and wishes.

Funding and capital

Usually, you need certain sources of growth, besides pure money and profits.  Don’t rely on family – go to relevant financial institutions and see what they can offer you.

Conclusion

And there you have it folks – the main challenges family business face. Even if it is your family business, you still need to stick to it, to respect it. If you want to reach at least some modicum of success, we advise you to stick to the above rules in order to avoid these common challenges.