How to Plan for Success in a Family Business
If your business is a family business, it is a good idea to consider the needs of the younger generation. Despite the fact that teens may be tempted to join the company, they should obtain outside experience before joining full time. If you plan on allowing your children to join the family business after high school, you can impose this requirement. This will give your children real-world experience and allow them to see how other companies run. This will help them understand the business more thoroughly when they join it full time.
In order for a family business to continue, the business should be carefully planned for succession. A successful succession plan should include five stages. The first phase should introduce potential successors to the business and guide them through increasing responsibilities. The second phase should discuss the future of the business, continuity and future opportunities. If all three phases are met, the family will be able to run the business effectively. In the end, everyone will be involved in the business, which will be a good thing for everyone.
In addition to maintaining continuity, the succession process should ensure that the business will survive. Conflict among family members is one of the biggest threats to a family business, and is often seen as the ultimate opportunity and threat. It arises from disagreements among interdependent parties, incompatible goals, insufficient resources, or interference from others. If handled appropriately, conflict can lead to positive changes in the family business and its succession plan. But this is not the end of the story. As long as the family members can work together to resolve their differences, it can create a win-win situation for the whole company.
The Three-Circle Model is an important framework for understanding the system of a family business. It helps you identify the major issues and make a comprehensive plan. The model recognizes different interest groups and their roles in a family business. The owners sit within the top circle, while family members occupy the left hand and employees occupy the right hand circle. The system is structured around these three circles and the relationship between them is critical.
As the digital world becomes increasingly disruptive, family businesses are under pressure to maintain their unique culture. As a result, it is vital to consider whether the culture is compatible with the strategy of the business. A culture that is not aligned with strategy will not only sabotage the strategy but will also lead to underperformance. By defining the culture of a family business, it will be easier to recognize the changes that need to be made and track progress towards the desired culture.
A family business owner should maintain consistency in the remuneration policy for all family members. It is important not to pay active family members more than other employees in the organization. In addition to this, the pay of each individual should reflect value. A family business should never pay family members inflated salaries or compensate them unfairly. Family members should be treated fairly, irrespective of their gender. This can also help avoid disputes and blame-casting.
