Now, manage your family business better
They say, “you can quit your job at a regular company, but how can you quit your family business?”
Managing and expanding a family business isn’t a cakewalk as the stakes are steeply high and quite literally your own sweat is involved. Businesses are typically conceived as cold, distant, money-making machines, devoid of humanistic sentiments. However, in reality, both privately-owned and family-owned businesses face challenges, if not of the similar kind. Although there are numerous family enterprises that act as the key drivers of economic growth, only 30% of them survive to the second generation, only 12% survive to the third generation, and just 3% survive to the fourth. India has been home to some of the most successful family run businesses that have changed the course of history.
So yes, a family business does soar high if handled with the right discipline, resources and integrity. Let us understand the myriad challenges that a family business faces:
Challenges and suggested solutions for family businesses:
1. Absence of cohesive goals in the family - In a corporate environment goals are set by the senior management, but in a family business goals are set by the head of the family-business, a role that’s seldom defined. This results in conflicts where one’s job might interfere with another’s.
Solution - It is important to clearly define the goals and objectives of each member involved in the business and ensure that everyone is aligned to achieve their goals, which in turn should achieve the overall goals for the business.
2. No accountability in a family run business - It is very easy to pawn-off the work to a later date or to another family member since the members are comfortable with each other and often take one another for granted. This can be detrimental for the business since there is no sense of responsibility for the work.
Solution - Establish a sense of responsibility among the members from the very first day. It is important that you hold them accountable for the work and define their role in the business.
3. Hiring for the person and not the job – Often times family business owners hire members internally into positions for which they may not be ready or suitable. This can be an example of bad decision-making and cause losses to the business.
Solution - Hire them for the roles they are suitable for and not just because they are the next of kin. It is advised to let them work their way up through experience.
4. Lack of external view - While family members running the business may have different opinions, their upbringing, culture, values and life experiences may be similar, leading to a similar view of the business, thereby affecting the growth of the business.
Solution - Try and involve an outsider, a family friend or advisor who can look at your business from a different perspective and advise on possible solutions accordingly.
Amidst all the happenings in a family business, don’t let it affect your choice of banking services. ICICI Bank promises to give family business tailored solutions to their unique issues and problems. ICICI Bank will help you navigate the various struggles and hiccups, as well as provide you with the best financial assistance to help your business develop to newer heights. Click here to view our Business Banking solutions.
Terms and Conditions apply.