Forward Thinking Business Blog –
In business, as in life, families are complex entities where emotional factors and conflicting expectations can give rise to tensions within and between generations.
Six common problems that can arise in a family business are:
1. Family grows faster than the business. When this happens, the business may reach a point where it can no longer generate sufficient revenue to support family members.
2. Family members not involved in the business may be unwilling to use profits to fund business growth
3. Family members may expect the business to provide jobs for relatives even if those relatives do not have the skills and/or experience for their role
4. Perceived favouritism in hiring/promoting family members can lead to difficulties attracting/retaining other staff and high turnover of non-family employees
5. Intergenerational tensions. Younger generation may feel pressurised into joining the business. Older generation may be reluctant to cede control.
6. Lack of succession planning. Various studies suggest fewer than 30 percent of family businesses survive the second generation, and only 3 percent survive the fourth.