Problems of Family Business

in Entrepreneurship by Francis Simisim — July 12, 2012 at 4:59 AM |

Family business is one path that is offered to the children of entrepreneurs. Of course, there’s a lot of plus sides to it but there are also a lot of cons depending on different scenarios. But I wish I was able to look at the following factors before joining, this way I could’ve been in a much more clear position on whether it was the right or wrong thing to do. Here are the Problems of Family Business.

 

Problems of Family Business

 

Job Roles are not Defined

Jobs needs definition, there’s no such thing as an all around guy. Last thing you want is to be labelled as the COO (Child of the Owner). You only have one body and can only do so much. Having roles is important for accountability and knowing your own responsibilities. Most traditional family businesses don’t have job roles, and you’re expected to do everything and anything (one of the very common family business issues). This becomes very difficult as the scope is way greater than yourself and you’d be blamed for whatever failure without you being involved in it. What also happens is the Authority problems, since there are no boundaries as to what you or other family members do, whatever was ordered from one member can be overridden by another (imagine if you ordered someone and your father ordered otherwise). This also becomes a potentially more bigger issue when an older sibling is under a younger sibling. This really brings up a lot of potential issues, which leads to the next problem…

 

No Success Measure

Since there are no job roles, there are no success measures. How would anyone in the company know that you did well or they did well? Since you don’t have a job role, whatever you do is not measured and there’s no way to say whether you’re successful or not. This also becomes a huge problem for succession planning, when you have other siblings in the company, who takes over once your parents retire? Ideally it will be who’s deserving right? But in this case, a lot of family politics can also come to play (favorites?). Succession planning become a war against siblings.

 

Salary issues

Since there are no job roles and success measures, how do you value someone? You can’t right? So usually joining your family can get you a smaller salary compared to what’s offered out there in the market. There’s no way to justify a higher salary since you’re pretty much working for family which you should be a saving or source of cheap labor. Salaries are given like an allowance (which can be taken away anytime) that’s why it’s become a major problem.

 

Not Open to Change

In time, you learn a lot of new technologies, advancements and styles in business. Most family businesses resist this while some family business members want it. It becomes a challenge getting it to happen unless everyone approves (or the older members approve). So growth becomes a challenge for most as it requires advancement of some sort.

It’s never just Business, it’s always Personal

The biggest problem is that when conflicts happen at work, it can get very personal very fast. Expect that with bad working relations, it can also mean bad family relationship. So this is a huge risk for anyone working for their own family.

 

 

Solutions to Family Problems

The most important thing when joining your family business is to be clear with members of the family with all the factors mentioned above. Know your options and see if it’s acceptable, if it is then continue and join, if not maybe working elsewhere may be better to preserve family relations. Understand that issues can get out of hand and can get very personal fast, so you do have to accept that part of the risk is family relations. Communicate, communicate and communicate! Always be clear and be objective when working for your family.

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