Making Family Business Work



Making Family Business Work

Abstract

The business which is run by two or more members of the same or different families are termed as family business. Managing a family business becomes challenging at times, mainly due to the involvement of emotions and feelings such as nepotism. Due to the failure in meting challenges of the family business, only 30 percent of such businesses survive. This paper describes some of the challenges of the family business, and the approaches to manage family business effectively.

Discussion

The family business may bring various advantages to the family. The most important benefit of the family business is the devotedness and reliability which the family members have for each other. This results in the success of various small businesses, which play important role for the improvement of socio economic conditions of the country. Some examples of the successful family businesses include Hilton Hotels Corporation, Wall-Mart, Tetra Pak and Ford Motor Company.The individual dreams of the family members, if organized together and well managed, can open new doors of success and growth for the family business.

Despite of having many advantages, the management of family business has serious challenges. We discuss few challenges of the family business in next section.

Challenges in managing the Family Business

As the family member is brought into the business, eventually the nature of relationship changes, and thus the challenges begin for managing a balance between business and family relationships (Titens, 2012). In this section, we discuss some of the major challenges for managing the family business. These challenges need to be manage carefully in order to make the family business work and be successful.

Misalignment in the Interests of Family Members

The interests of different family members may not be aligned with each other, or with the business strategy. This misalignment of the interests creates challenges in the family business. For example, if some incompetent family member wants to be president or director of the company, the situation may create conflicts among the family.

Impact of Emotions on Business Decision

The major challenges involved in the family business are due to the involvement of emotions and feelings of family members towards each other. These emotions often interfere with business decisions, and result in conflicts as it is a fact that different family members may look at the decisions from different perspectives (Sardeshmukh, et.al, 2011). For example, the family members who involve in the business as directors, silent partners, or stock holders would b more concerned for the capital expenditures and business growth. On the other hand, the members of the family who engage in the management of daily or routine activities would naturally focus more on the issues such as productivity, sales figures and the personnel issues, giving rise to the conflicts with directorial level family members. To handle the conflicts are one of the important challenges, as research shows that most of the time family conflicts result in the destruction of family businesses as well as the families (Levinson, ...