Key challenges for family businesses

The pandemic has accentuated challenges for many businesses, and family businesses are no different. There is also a unique set of challenges that family-owned businesses have as a result of the nature of their business structure.

George Style discusses the three key challenges family businesses face and how to overcome them.

1. Finding work-life balance

The pandemic has brought work-life balance into focus for business owners with lengthened working hours for many, and blurred the lines between work and home life.

For family businesses there is the added emotional element of balancing work pressures with personal feelings and the dynamics of different family relationships. For example parent-child relationships within business can be different to siblings or couples.

This intertwining can mean that crucial business decisions can be affected by differences in personality and opinion. Often, these differences have nothing to do with the task at hand.

This is where a strong work culture or even a ‘rulebook’ can really help families separate work and home life, the onus is on the family members to set the tone for the rest of the business to follow.

2. Succession planning and the generation game

Succession planning is often a topic that many business owners put off addressing, which can create real uncertainty for family members and others working in the business. Conversely, the pressure placed on the next generation to join the business and sustain growth and performance can be a huge turn off.

There is rarely a ‘good’ time to deal with succession, but in our experience the right answer is almost always to start the planning process well before any change is contemplated. Above all, the retiring generation needs to set clear objectives and expectations so that those following have some certainty about their own roles and life plans. Inevitably there are tax and structuring considerations in any succession plan, but without a motivated and experienced next generation to hand on to, the plan will not be a success.

3. Building a high performing team

No two family businesses are the same, and the same can be said of the people working in the business. The right mix of family members and professional managers within a leadership team, and the dynamic this creates can be key to unlocking the next stage of growth in the business. The wrong mix of people, or even the behaviour of family members can undermine this.

Objective setting, measuring performance, and fair compensation and incentives are all crucial to keeping the team performing effectively. The best family business leadership teams have a clear distinction between compensation for family members for their business roles and the returns they receive as owners.

If you would like to discuss how to set your family business up for success, get in touch.