- Family businesses contribute significantly to the U.S. economy, often as community pillars.
- Challenges faced by family businesses include work-life balance, emotional conflicts, and unequal responsibility distribution.
- Limited resources and succession planning hinder family businesses’ continuity and growth.
- Proactive solutions include open communication, establishing boundaries, regular family meetings, and professional development.
- Despite challenges, family businesses can thrive with determination, a strong support system, and proactive planning.
Starting a family business is not an easy feat. But, running it successfully for years can be even more challenging. While it’s always advantageous to have your relatives as your employees because of the implicit trust you share, it comes with its share of complications and hurdles. Here’s what you need to know about family businesses in the country, the everyday struggles they face, and the ways to deal with these problems.
Family Businesses in The U.S.
It’s estimated that there are 5.5 million family businesses in the country. These businesses comprise a significant portion of the economy, contributing to 57% of the country’s GDP and employing nearly 63% of the workforce. Family businesses range from small mom-and-pop shops to large corporations passed down for generations. They are often seen as pillars in their communities, providing jobs and driving economic growth.
Additionally, some family businesses have the highest revenue among other companies in the country. For example, Walmart is valued at around $443 billion and is owned by the Walton family, making it one of the largest retailers in the world. Other notable family businesses include Ford Motor Company, The New York Times Company, and Mars Inc.
Challenges Faced by Family Businesses
Not many family businesses survive beyond the second generation. Here are some challenges faced by family businesses:
1. Lack of Work-Life Balance
It can get tricky when you work and live with your family members. Most of the time, work takes precedence over everything, leading to dissatisfaction in family relationships. This issue can be tackled by adhering to a proper work schedule and separating the workload amongst family members without overlapping responsibilities. Refrain from discussing work during family time and give quality time to each other.
2. Emotional Baggage
Emotional conflicts are inevitable in family businesses because it’s hard not to bring the emotional baggage of your personal lives to work. You must learn to detach your troubles and keep a professional attitude. Communication is vital for a functional business relationship, and it’s better to have a dialogue about the issues that bother you than keep them inside.
3. Unequal Distribution Of Responsibilities
In family businesses, there can be a tendency to show favoritism or partiality towards a particular member. That can lead to conflicts and disagreements within the family business. The solution is delegating responsibilities based on experience, interest, and expertise rather than family hierarchy. The more transparency and clarity in responsibilities, the less ambiguity. A fair distribution of duties will benefit not only the business but also the family dynamic.
4. Limited Resources
Family businesses often start with limited resources and struggle to access funding and financing. A way to overcome this problem is to plan wisely, focus on sustainable growth, and create a financial backup plan if things go wrong. Networking can also help in accessing new customers and markets. Many government programs also offer funding, so look out for those.
5. Succession Planning
Succession planning is essential to ensure the continuity and longevity of family businesses. It entails deciding who will take over the business after the current generation. It is important to prepare a detailed plan that involves your family members. Start delegating responsibilities to the next generation and training them to take over. It will lead to a smooth transition and prevent any conflict in the future. Additionally, it might be good to hire an experienced family law attorney to help you. The attorney can provide legal advice and draft documents for a seamless transition.
Proactive Ways to Address These Challenges
There are also some proactive ways to address these challenges. Here are some of those ways:
Effective communication is the key to maintaining a healthy work-life balance and handling emotional conflicts in family businesses. Encourage open dialogue and active listening among family members to address problems before they escalate.
It’s crucial to set boundaries between work and personal life, especially when working with family members. Make it clear that business discussions should be kept at work and not brought into personal time. This will help maintain a healthy relationship outside of work.
Regular Family Meetings
Schedule regular family meetings to discuss any issues or concerns related to the business. It’s an opportunity for everyone to have a voice and address any conflicts professionally.
Encourage and invest in the professional development of family members to ensure a competent and skilled workforce. This will prepare them for future leadership roles and help the business grow.
While running a family business may come with its challenges, it also has its perks. Family members share a common goal and vision for the business, which can lead to a strong sense of loyalty and commitment. By addressing and proactively handling these challenges, family businesses can thrive and continue their legacy for generations. So, if you’re considering starting a family business or running one, remember to communicate openly, set boundaries, and plan for the future. With determination and a strong support system, your family business can overcome any obstacle and succeed.