The challenges and advantages of running a family business

A large majority of our clients are family-run businesses. Every small business faces challenges. Every business owner must deal with issues and problems in the course of building and running a successful operation. But a family business offers particular challenges and advantages. A recent E-myth article that I have read sets out these rather well.

The advantages of a family-run business are obvious. You work with people you know well and love, you experience greater flexibility and security, and often you’re building a financial legacy for retirement and future generations. These benefits often contribute to a positive business identity and a reputation of trust. It’s generally agreed that when customers see you as a family company, they have a tendency to trust you more. ‘Family owned and operated since 1948′ has a nice ring to it. And statistics consistently reveal that the long-term success rate of family business exceeds that of other, similar sized businesses.

But there are challenges too; the failure rate among family-owned small businesses is high.

A list of the top ten sources of business problems for the family business include:

• Family issues such as divorce, financial crises and health problems

• An absence of clear policies, procedures and business norms

• A lack of documented business strategies for operations, growth and succession

• Compensation issues (salaries, benefits, etc.) not being clearly defined

• Confusion about roles, poor control of operations, and a lack of a reporting structure

• Lack of or misplaced talent, skills and ability for family members

• Issues with non-family employees such as fears of despotism or favouritism

• Communication problems due to unresolved family issues or relationships

• A lack of a unified vision for the business

• An absence of documented company values, ethics and business philosophy

Find ways of preventing this happening to you by reading the full article on Challenges of a family business