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Running a Successful Family Business - Issues to Consider

Jun 28, 2008
A critical and often overlooked factor in your company's success is the company's organizational structure. One critical area to look at is whether your business is a family business or not? Some people wrongly assume this makes little difference to a company's effectiveness; however, research proves this is a dangerous assumption to make.

In fact it is estimated that 70% of the family run businesses that fail (the average life expectancy for family owned firms is 24 years) fail because the owner/manager did not understand the dynamics of running a family business.

There are many different views on what constitutes a family owned business. However for the purpose this article I will say that a family owned business is one that is has a majority share (51% or more) owned by one family.

Given the amount of conflict that exists within families, is it any surprise that companies that are family businesses allow some of that conflict to affect the company? This is a perfectly natural thing to happen and it is important to plan processes and systems for dealing with this before it happens, rather than wait till emotions are heated and tempers have flared.

One of the key areas that family businesses need to look at is succession planning. This is an area that if you 'fail to plan you plan to fail'. The best strategy is to create a process for it before any challenges arise so that you can ensure that family business has a smooth transition between generations.

Strategy formulation in a family business is another key area to look at for maximum growth and effectiveness. It is crucial to get this area right as strategy is the core building block of any company. What can happen is family based dynamics and conflicts get in the way of proper creation and implementation of strategy. It's important to not let these factors get in the way of your company implementing the right strategy if it's to survive long term.

Business survival can be challenging and it can be even more challenging if there are family conflicts in place. To ensure the survival of your family business you need to make sure that you are dealing with potential issues proactively through putting in place processes and guidelines rather than waiting till challenges arise.

Different family owned businesses will have different levels of relationship to the problems I have been talking about (largely dependent on how much family involvement is there is in the business). So this is largely a general overview of some of the issues you may face. The next best step is to raise these issues in your business so you can ensure the long term future and success of your family-owned business.
About the Author
Author: Dr. Marc R. Dussault shares his valuable expertise on how to ensure stability and profitablity during family business succession planning within a family-run organization. Visit the website to discover more about the challenges and solutions around company succession
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