| Family-Owned Business
Almost 90% of companies in the U.S. are family-owned. But the majority of these don't make it to the next generation and only about 10% make it to the third. Although a family-owned business can be extremely rewarding, it also involves a unique set of difficulties and challenges that must be faced if the business is to survive.
The main difficulties in family-owned businesses come from issues such as communication, the stress of working together day-to-day , and surviving succession.
Communication is vital in a family business. Relationships can become confusing as family members have to operate in different roles in the family and business. In the business, there needs to be clear mechanisms to deal with conflict that avoids the family dynamics. Successful systems include: establishment of policies before issues arise, regular family business meetings to discuss issues, and working with an outside facilitator to work through conflicts.
Management questions also need to be addressed. Establish clear job descriptions and lines of authority so that both family and non-family employees understand the chain-of-command. Often, an independent board of directors can help maintain objectivity in management decisions.
Succession is the biggest challenge that faces family-owned businesses. This can be a highly emotional topic for a number of reasons. If a business is to survive succession, it is important to begin the process early--a decade or more is not too soon. This provides the time to discuss the issues and decide how the ownership and leadership will be divided. It also allows time to train the successor. It is also important to set a timetable for succession.
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