Family enterprises are unique and complex entities. They come with more stakeholders to manage and require small-business owners to act not just in the interests of the company, but also in the interests of the family.
To help organisations that might be facing these issues, we've assembled solutions to four common problems that family businesses might be facing.
1) Poorly defined roles
In many family businesses, roles are poorly defined. Often, family members will have a lot of influence even if they don't have formal positions within the enterprise. While this is an inevitable part of running a company, it can also make it much harder to create a concrete chain of command.
This calls for professionalising each role within the company so that everyone's job responsibilities are clear and can be communicated to other staff members. Defining these roles can also help with our second major issue: family feuds.
2) Disagreements within the family
In every family, there are different personalities who can clash in the right circumstances, and that's perfectly normal. However, it is rarely the best way to run a business, especially if family feuds begin to affect the company's performance.
As well as having strongly defined positions, family businesses should consider having a dedicated dispute resolution process. This could take the form of a family council or an objective third-party who can weigh in on common disagreements. Whatever the solution, having this formal process in place can prevent hot tempers from impacting the day-to-day running of the business.
3) No clear successor
Succession is one of the biggest challenges that family businesses will face. If there is no obvious successor in the first generation who can take over the reins, owners will have to consider where the next leader will come from.
This might be a grandchild, cousin or other distant family member. If there is no one at all within the family who might be trained up, the alternative is to look at non-family members within the business or hiring someone from outside the company who can step into a key leadership role.
A good strategy to take here is to develop a comprehensive screening and assessment program for everyone who is interested in a senior role. If you can objectively measure the qualities of different candidates, then it will be much easier to determine who will be the best position to assume greater responsibilities and lead the company in the future.
4) Create the distinction between family members and employees
The culture of a family business is one of the biggest draw cards for workers, but it can still be difficult working in a family business for other employees who are looking to grow within a company.
This is certainly an issue when it comes to succession - those who are looking to move into a management role will feel stymied if they can't put themselves forward for this process. However, succession is just one area where the distinction between family and non-family members needs to be defined.
Consider whether family members are pulling their weight and have their performance measured in the same way as regular staff. Failing to recognise when a family member isn't fulfilling their responsibilities won't be viewed kindly by other staff members, and ultimately isn't in the best interests of the company.
The same goes for promotions. An even playing field between different candidates can ensure the best person gets the position, not to mention improving office morale.
Managing the challenges that a family business faces is no simple feat. But the rewards for doing this well can be substantial, creating happier employees and a stronger business that can remain within the family for generations.
If your business needs any help with working capital management via a business line of credit, debtor financing or equipment financing, contact Earlypay’s helpful team today on 1300 760 205 or visit our sign-up form.
If you'd like to learn how Earlypay's Invoice Finance & Equipment Finance can help you boost your working capital to fund growth or keep on top of day-to-day operations of your business, contact Earlypay's helpful team today on 1300 760 205, visit our sign-up form or contact [email protected].