The Good, The Bad and The Ugly of a Family Business

It is said that a family business should be the perfect model for build a company. Why? Well, very simple, your parents, children, brothers or cousins ​​should without a doubt be your best allies when it comes to do business.

Trust and good relationship are very positive factors for the success of a company and exploiting these values ​​as a family is the secret of many corporations that transcend. However, not everything is taste of honey, Family businesses they also have their problems.

I have the pleasure of meeting several renowned entrepreneurs whose companies have been founded under the philosophy of a family business, where middle managers, managers, directors and key decision-making positions are filled by close family members.

Personally, I have seen with pleasure and amazement how harmoniously these businesses can function when their gears are perfectly matched thanks to an excellent relationship of trust.

The good thing about a family business

  • Common goals can be more easily developed
  • There is usually a greater commitment from bosses and managers
  • Confidence is generally one of your great strengths
  • Managing finances is more conscious
  • Expansion can be easier when you have family members willing to take on new challenges
  • They can transcend generationally more easily
  • The family unit can withstand difficult times in companies more easily, especially at the beginning or in times of economic difficulties
  • They are based on family values
  • The skills of each member involved in the business can be used more effectively, that is, “shoemaker to your shoes”

The downside of a family business

  • If you are not careful, you can tend to lack of diversification
  • The lack of trust or commitment of a family member can trigger serious problems due to the weakness in the areas that said member is in charge
  • The business can be exposed when family members are included only by affinity when they do not have the capacity to hold important positions
  • Conflict management can become complicated when emotions are involved

The ugliness of family businesses

  • It is very common for businesses to succumb when the third generation loses the objectives, vision or work discipline of their predecessors
  • They are very vulnerable to relationship problems between their members
  • Family problems can easily translate into business problems when care is not taken to separate the two functions

As you can see, the good thing is that advantages of a family business outweigh the disadvantages. However, some ideal recommendations for forming a family-based company are:

  • Set clear rules of work among members that includes a serious commitment on the part of each member
  • Learn to differentiate family functions from business functions. Your son can be a son at home, but if he is the financial manager in the company, he must be given full authority for decisions according to his role
  • Establish a Magna Carta or a family pact or agreement that establishes in writing and with total clarity, the vision, mission and clear objectives of the company so that everyone is clear
  • Clearly define an organization chart with functions of each member that everyone knows and can respect
  • Train the little ones so that they can learn the business and corporate culture in such a way that the continuity of the company is guaranteed
  • Develop an organizational culture to teach its members to separate family interests from business interests. House problems should stay at home and business affairs by closing the door.

For this and much more, building a family business with your wife, children, and grandchildren should be a very rewarding experience.

  • , title : 'Grit & Growth | All in the Family; Managing a Family Business for Success and Succession
    Grit & Growth | All in the Family; Managing a Family Business for Success and Succession

What do you think? Why don’t you share your experience as part of a family business?

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