2 minute read
Haines Watts
By Daniel Morgan, Managing Partner, Haines Watts Esher
Three challenges facing family businesses
Family businesses make up approximately 85% of private sector businesses. They have unique advantages including family members sharing a similar vision, values and commitment to drive business performance.
However, they can also be inward looking and resistant to change, lacking that outside perspective that can spark new and innovative ways of improving processes.
Below I discuss three key challenges facing family businesses and how to overcome them.
SUCCESSION AND TRANSITIONING TO THE NEXT GENERATION
While the handover between the fi rst and second generation may be a smooth process, this can become more challenging when you hit the ‘third generation problem’.
The initial founding family members built the business from the ground up, with the second generation seeing this labour of love. They form an understanding of the business at a young age and are fully imbedded when the time comes to take over.
By the third generation, the family has expanded, with cousins across various households who have all had differing levels of involvement in the business and offer different skillsets and competencies.
This can be a blessing and a curse, while all these variations can help to build a complete team that complements each other’s strengths and weaknesses it can also create friction and insecurities around succession.
While succession can be an uncomfortable conversation, in my experience it’s better to tackle it well before any change is to be implemented so that everyone knows where they stand. An unbiased advisor can also offer objective advice and work alongside all the differing personalities in the family with no agendas of their own.
BLURRED LINES BETWEEN BUSINESS AND FAMILY
There has been a lot of discussion around work-life balance in the last couple of years but this can be even more challenging to achieve when your personal and business life are so entwined.
When working with family, it can feel unnecessary to set clear boundaries but, if anything, I think it is more important than a traditional workplace. Whether your ‘rules’ are not talking business at the dinner table or implementing set working hours, having a clear distinction will benefi t the business in the long-run.
If you feel like there is no separation between work and family, it’s likely that you’ll burn out. You need to allow yourself a respite so that when you are working you are able to give your all. The same goes for your relationships within your family, if they become too work-centric, resentments will grow.
SCALING YOUR BUSINESS
As your business grows and scales, you need to prioritise key skills over family ties. This can be tackled in a couple of ways. Either by investing in family members to expand their skillset or by recruited external talent into key roles. Both approaches have their advantages and drawbacks but I generally advise businesses to implement a combination of both.
The longer term solution of upskilling family members should be a big part of the business’s talent strategy and generally this will also feed into the conversation of succession. At pivotal moments, building up your management team by recruiting outside support that is already up to speed, and that offers a fresh perspective, can be crucial to the success of the business, and expand your thinking in ways you may not have expected.
