Do you remember watching ‘The Godfather’ movie and thought; “Gosh, I want a booming family business just like this!”…well, minus the drug-dealing part.

Looking from the outside in, a successfully run family business always seems glamorous, like a bed of roses. Think of family dinners, vacations, laughter, dramas, the bond they share with each other. What could possibly go wrong?

Not everything seems as it is. A lot of family businesses do go under after a while for many reasons. If your family owns a family business, or you are considering starting one, there are a few things you must know to ensure you avoid the pit of failure. Let’s dive in.

  • LACK OF PRESET POLICIES

Family conflict is a constant feature. It’s hard enough to manage relationships with family members who have conflicting views. When in business with such persons, many may fall short of professionalism because such persons may tend to bring family feuds into the workplace. This gives room for bad decisions to be made because they are made from an emotional and not rational place. 

One way to avoid this is to set very early on in place conflict resolution policies that ensure best practices are followed through at all times.

  • CLASH OF IDEAS

The phrase, ‘too many cooks spoil the broth’ is very true in family-run businesses. Where major decision-makers have different views on core values and missions, the business is set to fail. 

For family businesses to effectively thrive, all parties must decide to follow business policies down to the letter. Where the business is guided by objective rules, it is positioned to be a separate body from the family.

  • LACK OF FINANCIAL EDUCATION 

It is not rare to see successors of family businesses be unequipped with financial and managerial expertise to run the business. This leads to poor decision making and mismanagement of the family’s capital. This is a risk to the business.

From a tender age, leaders at such organizations should do well to nurture a sense of responsibility, stewardship, history, and family values in their immediate successors, and in generations to come.

  • UNMERITED LEADERSHIP

The promotion of unqualified family members into leadership positions is another reason why family businesses tend to fail. 

When an unqualified person steps into a leadership position, a lot of things tend to go wrong. The common consequence of this action is a deviation from the business culture, and resentment settling in the hearts of qualified employees.

A safe way around this is to set up policies that outline the requisite experience a person needs to possess for him/her to assume certain positions. This guarantees transparency, efficiency, and scalability.

Conclusively, we have identified in this article that the dynamics of running a family business are quite different from that of running a standard business operation. There are so many intricate details and necessary steps that need to be taken to ensure success.

Being able to find a balance between personal and professional areas will be beneficial to the running of any family business.

It is noteworthy to point out that some of the long-standing corporations of the world today are family-owned businesses. This further proves that family businesses when done right, can have the ability to grow into legacy businesses that stand the test of time.

Author

Olufolake is the resident storyteller at Dukka. Without me, the world would just be aweso.

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