Managing Family Owned Business Essay Example | Topics and Well Written Essays - 3500 words

Managing Family Owned Business - Essay Example From this research it is clear that family businesses are created for a variety of reasons, but a common belief among founders of family businesses is that working together as a family unit can be more profitable than working alone. Family businesses, whether they are small, local enterprises or large, national companies have unique concerns, such as interrelationships between family members, the question of succession in the next generation, maintaining talent, ownership and finance, in addition to all the problems that other businesses face. A family business has the challenge of balancing both the family and the business. Many times these two systems are in conflict with each other. Power struggles, resolving conflicting vested interests, leadership and mergers are other issues that arise on a daily basis. The importance of the consultant in supplying the guidance and expertise in the area of managerial skills is often overlooked in the family firm either because of lack of financ ial resources or the erroneous belief that an outsider does not know the business and thus cannot offer effective solutions. As resources and energies shift from transaction based to value-added activities, there is mounting pressure to improve traditional measures of business efficiency (Javier & Low, 2003). A family business has the challenge of balancing two distinct and often conflicting systems: the family and the business. Despite family business' significance in the economy, researches are showing that most of them are struggling to survive beyond a single generation. (Krebs, 2001; Carlock & Ward, 2001). According to Theune (2000) â€Å"stories about family businesses that failed due to mismanagement or family conflict are very common.... [and] only three out of ten family businesses survive into the third generation† (p. 1). Researchers are concerned that the biggest factor in the success or failure of family businesses are the relationships between family members. Th ere are many things to consider including personal well being, family life, financial security and even standing in the community (Hubler, 1998). The implications are that each generation can either bequeath the business and the business skills to the next generation or choose to let the emotional, psychological or relational issues destroy the business (Kets de Vries, 1996). The challenge for trainers to overcome is to synchronise individual visions of the family and the business. It is this creation of a shared vision that is the work of the planner or trainer before designing and implementing any technical succession plan that sets up a family business for success (Theune, 2000). Siblings vie for positions within the company over power, status, influence and prestige. There are conflicts over succession with siblings, conflicts over succession with parents, as well as intergenerational conflict. Issues such as how a female successor deals with male resentment and domination and g ains respect have also surfaced. Family businesses suffer from the complications of hiring unqualified