Family Business Challenges: 3 Issues You Mustn’t Ignore

Family-Business challenges

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All types of small businesses face challenges and need to suffer through some hard times to reach success. However, a family business has additional problems to overcome because of the interpersonal relationships you already have with your family members. It’s crucial to think about these before starting up a family business. This will help you decide if creating a family business is the right choice for you and allow you to create a strategy that minimizes conflict.

Why Does Conflict Arise in Family Businesses?

First, let’s think about why conflict is prevalent in family businesses.

Most people start a family business because they want to improve opportunities for their loved ones, as well as themselves. You may also want to create a legacy to pass on to your children. Other people are just attracted by the idea of entering into a business venture and spending more time with those they care about the most.

However, working so closely with people you already have long-standing personal relationships with can cause problems. For instance, it may be difficult to switch to a communication style necessary for business or taper strong opinions when you’re with family.

Other issues come from the varying levels of involvement different family members have in the business. Some family members will have managerial roles, whereas others may have less of an understanding of the inner workings of the business. This can lead to disagreements surrounding crucial decisions for the company.

Common Issues in Family Businesses

The above reasons for conflict in a family business can lead to a few common issues. Being aware of these from the start can help you take action to mitigate problems. Whatever you do, never ignore these issues — they won’t resolve themselves on their own!

1. Arguments About Direction

The most common issue, named by close to half of family businesses in one survey, is arguments about direction. This leads to disagreements about what action to take and problems developing your business strategy.

2. Choosing a Successor

In the best case scenario, your family business will become successful and continue to thrive for many years. However, this brings the issue of choosing successors to manage the company when current key members decide to step down.

At some family businesses, there is an obvious successor; at others, things are less clear cut. If you fall into the latter, this is something you need to resolve early, as it will only become more a source of contention with time.

Yet another issue is that the successor may not have reached legal age when a new business leader becomes necessary. This means someone will need to manage the business in the interim — and this person could end up taking advantage of the opportunity, particularly if you choose someone outside your family.

3. Family Members Not Pulling Their Weight

Finally, you may find that you run into difficulties if some family members are working harder than others. Unlike with regular employees, you won’t want to let workers with poor performance go. In fact, it may even be hard to broach the subject.


Is Starting a Family Business a Bad Idea?

You’ll find there’s no shortage of people who will ream off a number of reasons why you should never go into business with family members. Many of these people will have their own personal anecdotes (perhaps horror stories).

Nonetheless, just because others have failed doesn’t mean you’re doomed to do the same. Countless family businesses have been successful, including Walmart, Volkswagen, Berkshire Hathaway, and more. There are easily as many advantages to starting a family business as disadvantages. To decide if it would be the right decision for you, it’s necessary to weigh the pros and cons.

Pro: Everyone Knows Each Other

With a family business, you never have that awkward stage where you’re learning about your employees. Everyone already knows everything about each other: the good, the bad, and the ugly. You can use this knowledge to benefit from family members’ strengths and work around their weaknesses.

Con: Negative Effects on Family Relationships

If you fail to resolve issues that crop up while working together, problems could expand beyond the workplace. Worst of all, they could even create a divide in your family.

Pro: Commitment to Success

You’ll all be invested in your business and want to see it succeed — much more than if you were working for an employer. Plus, great results mean the people most important to you in the world all benefit, too.

Con: Echo Chamber of Ideas

If all your family members have similar backgrounds, your ideas may be similar. You’ll struggle to find the same kind of innovation as a business with a diverse range of employees.

Pro: Get Started Faster

There are many things to do just to get a business off the ground. By eliminating the need for interviews and background checks, you can get started that much sooner.

Con: Pressure to Hire More Family Members

When a position opens up at your business, there may be pressure to fill it with someone else from your family — even if this individual is not the perfect fit. This could mean choosing between what’s best for your company and keeping the peace with your family.

Strategies for Developing Good Family Business Relationships

If you do decide you’re ready to take the leap, the next step will be to learn how to effectively run a family business. These strategies will help you overcome (or even avoid entirely) many family business disputes.

1. Establish Boundaries Between Family Life and Business

There are a couple ways to separate family life and business: first at home, second at the workplace.

At home, avoid discussing business matters. This will prevent those who are not involved in your business from feeling left out. It will also avoid putting any non-family members that work at your business at a disadvantage.

At the workplace, try to keep family matters out of the conversation as much as possible. Instead, stick to discussing operations and business topics. You’ll keep the workplace a neutral territory and minimize drama.

2. Prepare the Next Generation to Take Over

From the start, you need to make everyone’s stake in the business clear and come to an agreement about who is in line to take over the company when the founders step down. Make everything legal as soon as everyone is on board.

To avoid resentment, never make assumptions about who will take over the business — this should be a choice. For instance, if your children are quite young at the moment, there’s a chance that they’ll want to pursue different interests, perhaps never becoming involved in the family business at all. Alternatively, they may want a position in the business but not in management.

Once you’ve figured out who will be taking over your business, you need to make sure these individuals are adequately prepared. Dedicate time to teaching them about operations and help them feel more connected to the business.

3. Help Family Members Reach Their Goals

Running a family business puts you in the unique position to ensure your employees reach their career goals. At regular intervals (as goals do change with time) have conversations about what various individuals are looking to achieve in the long term. You may be able to give them new responsibilities or provide them with training to keep them on track to meet their targets.

4. Think About What Will Best for Your Business Long Term

Hard conversations are unavoidable. Family members may think that they (or another relative) are right for a promotion when actually someone else is a better fit.

If you’re serious about growing your business, it’s important to build a meritocracy. This often means hiring and promoting people from outside your family. Ultimately, such decisions will be much better for your business: you’ll gain the skills you need, see greater productivity, and even become more innovative. If a family member is unhappy with your choice, try to compensate by creating another opportunity — especially one more closely linked to the individual’s career goals.

5. Hire a Virtual Assistant

When you’re overworked and exhausted (especially if the work is dull), you’re more likely to snap at your family members. In addition, family members who dislike some of the tasks that land on their plate will lose motivation, meaning their performance may suffer.

The solution is to delegate monotonous tasks to someone else — not just pass them on to another family member. A virtual assistant can take over all the work no one wants to do, including activities that are currently causing conflict. For instance, a VA can handle tasks like invoicing, website maintenance, and CRM management.

The best option for a virtual assistant is someone who specializes in working with small businesses. With MYVA360, you’ll gain access to a whole network of virtual assistants who have experience helping family businesses succeed. We’ll match you with someone who is skilled in the exact type of work you need. Plus, if your workload ever becomes extra heavy, you can receive a second pair of helping hands at no extra cost. Contact us today to receive your free trial.

Laura Holton

Laura is a professional writer specializing in content aimed at small businesses and entrepreneurs. She has helped countless startups find the information they needed to take their ventures to the next level.

Laura Holton

Laura is a professional writer specializing in content aimed at small businesses and entrepreneurs. She has helped countless startups find the information they needed to take their ventures to the next level.


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