The success of a family-owned business largely depends on the commitment of the family members involved in the business. Family enterprises predominantly demand ‘all or nothing’ approach as the entire family’s livelihood often depends on the success of the business.
Sanjeev Orie, CEO of Value-Adds at FNB Business recommends the following ways to avoid challenges which could destroy a family business:
Be clear on ownership
Ownership within family businesses could become a major issue if it is not made explicitly clear (and in writing) who owns what. In cases where this is not clear, the business could suffer as everyone will feel that they have equal rights to the business’ assets.
Decision-making powers
It is important to have one or two people (at most) to take charge of all business affairs and make important decisions. The decision-maker/s could always consult when there are far-reaching decisions to be taken, such as expanding or downsizing.
Clarify roles through job descriptions
If family members are actively involved in running day-to-day activities of the business, it is necessary to clarify roles and have job descriptions so that everyone is clear about what they need to be doing.
Avoid interference
Family members are bound to have an opinion on how the business should operate. In a case where the person running the business is not part of the family, it is important to channel opinions or suggestions in a manner which does not seek to interfere or undermine the decisions of the management team.
Plan succession
Succession is one of the biggest challenges often faced by family businesses. It is essential that the family has a plan in place to ensure seamless transition and change of leadership when such time comes.
