A family business managed by more than one family members faces challenges due to some of the following causes:
1) Differences about the Direction of the Business
Family members, particularly the second generation onwards, differ among themselves on strategic matters, i.e. which way the business should go and grow. Differences about which new industries or markets it should get into, which product or service lines it should offer, which geographies it should address etc. crop up and become a source of the conflicts.
2) Unclear Roles, Responsibilities and Accountabilities
If there is no well-defined process to formally decide the roles and responsibilities of the family members working in the business, there prevails confusion about who will do what, who is responsible for what and to whom. Some of the members possess equal ownership rights over the business and hence they don’t feel any accountability towards anyone else in the family. They operate on their own, sometimes in conflict to the business interests.
3) Conflicts Arising out of Unclear Decision Making Authorities
Due to the same reason above, there exists a lack of clarity about who can take which decisions. Sometimes, this leads to a lot of confusion and avoidable friction and ego clashes, if the family members have not worked out a rational way out of such a possibility.
4) Compensation and Benefits to Various Family Members in the Business
There could be disputes and arguments about who gets what. If the compensation and benefit structure of family members working in the business is not worked out thoughtfully, it may become an issue of contention.
5) Leadership or Succession Issues
Ideally, a business has to be headed by one person, to drive it in a single direction. When the original founder is thinking of retiring from the business, he must decide on his successor who will take over the baton from him. If the decision regarding succession is not taken in advance and if there are more than one potential suitors to the top seat, the conflict for the leadership position is common in many family businesses. These conflicts sometimes result into splitting of the business or complete collapse of the business, if they not resolved amicably.
6) Interferences by Spouses and In-laws of the Family Members in the Business
This is a strange but real side effect on family businesses. Immature or misguided spouses and in-laws’ natural human limitations or short-sightedness sometimes blow the smallest issues out of proportion and create avoidable conflicts in a business.
7) Lack of Communication
In the absence of a formal communication channel to inform and share the developments in the business to those family members who are not involved in running the business, miscommunication and grapevine flourish. This creates a lot of misunderstandings, which, if not resolved in time, lead to a lot of problems later.
(Expert advice to GROW your business wherever you are, whenever you want.
SMEBusinessGuide.com… https://goo.gl/E3pfoQ)
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