4 Pitfalls That Derail Growth Trajectory In Family Businesses
What makes family businesses strong can in fact bring about their downfall.
After having worked with family businesses for the past 4 years and understanding their DNA, I have understood the factors that derail the growth trajectory in a family business.
The biggest pitfall is in the family side of the family business, but not always.
Family Is The Strongest Driver Of Competitive Advantage
If the family side is not well managed the whole competitive advantage remains unrealized.
Understanding what makes a family stay together is essential for keeping the growth trajectory. On the contrary family businesses where the family is not well-managed are running at the mercy of emotional impulses. In this article, I will lay down 4 pitfalls that disrupt the family and have the biggest implication for growth.
#1. Not Understanding The Functional Role Of The Family
The business is what makes a family business, but it’s the family that makes it functional, a clear understanding will remove constraints of future growth.
Understanding the role of the family is crucial for future growth. Are you a family doing business together? Or are you a business that happens to have a family? In the case of the former, the business serves the needs of the family and in later the family serves the needs of the business.
#2. Not Conducting Objective Diagnosis Of Long-Term Growth Needs
Business is often the reason for forming a family business.
Once you have understood the role of family, the second most important factor is setting expectations about the future of business. If you are a family doing business then ask, can this business serve the needs of the growing family for the next 10 years? If you are doing business with a family, ask can the family fulfill the needs of the business in order to grow for next 10 years?
#3. Not Making Necessary Agreements To Ward Off Conflict
Emotions run high, setting expectations is thus necessary.
On a high speed road the last thing you need is to pull up with a hand-brake. And this comes up ever so often. Once you have done the needs diagnostics, you need necessary agreements that chart out the trajectory for future ownership, financial benefits and leadership needs.
Having these three steps done will ensure that the family side is ready to deliver its true value to the business growth and a bright future.
This post was created with Typeshare