Maintaining Family Business Continuity Through Generations
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Caleb HardeeMr. JamesENGL 2201-052April 13, 2017Maintaining Family Business Continuity Through GenerationsIntroductionMost people assume that family owned businesses operate smoothly considering they have been operated under the same family for generations. Although people who are involved in a family business can agree that keeping a family business alive is extremely difficult. In several instances, failure of a family business has been known to create problems that lead to a divide in the family. Several family business fail to reach the potential that they are capable of reaching due to overwhelming circumstances that aren’t communicated effectively.Family Businesses tend to be destroyed and a lot of problems emerge simply because the owners never made the decisions required to ensure further continuance through generations. Family business owners typically settle for their success in the past and continue to use the same practices they’ve have been using their whole lives. They enjoy the power of their positions to much and fail to realize the importance of working together as a family to solve problems. Another problem is that business owners fail to pay attention to the ever changing economy. It is important for one to realize that the economy is always fluctuating and people demand different things at different times. Business owners must be aware of these changes and must use new effective planning that will direct their business in the right path. It has been made obvious that majority of family owned business fail, so what are some ways that family businesses can assure that their business will stay alive?The following question has been raised, Will the practice of business ethics, leadership skills, and the use of strategic business plans support the continuance of a family owned business? If a business owner doesn’t practice leadership skills, the owner and the business as a whole is negatively effected. Understanding business ethics will also help the owner realize how a business should be managed. Lastly, when a business owner doesn’t practice strategic planning and effective communication throughout the family, then the business can be harmed greatly. Will following these simple methods lead to guaranteed assurance of continuance in a family owned business.RationaleThere is nothing more devastating than witnessing a family business fall apart and it is even more heartbreaking to be involved in the business. It is proven that most businesses start out great when the founder is in control, but when there is a major trigger event, the family and business tend to fall apart. Such as when a decision is made by the owner to sell the business, or handling family rivalries, or even deciding which family member will take over the business when the founder passes. These are all common examples of events that lead to failure of the business. It’s extremely frustrating for a family to witness their business drastically transition from running so smoothly to falling apart due to failure resolving issues. Business owners today can greatly benefit from studying family owned businesses that have failed in the past. By doing this, family owned businesses can avoid making the same mistakes that previous owners have made. When hearing this, one may wonder what mistakes should be avoided and how they can be assured that these things will not happen. Finding solutions to problems occurring in one’s business may be difficult, but this brings up the severity of this issue. If so many family businesses are struggling to stay alive, what are these businesses doing wrong?
Researching several different articles has provided information on the most common failures of family owned businesses. Considering a vast amount of family owned businesses tend to fail to make it past the third generation, it is evident to find out what these businesses are doing wrong. Problems within family businesses tend to began with the founder of the business. When a business opens, the founder operates the business the way they believe it should be operated. When the next generation takes over the business, they follow the same procedures as the founder. Even if the founder gained success with their methods, new strategies and plans are essential to adapting to our constantly changing world. Another important thing to remember when gaining succession is to maintain a clear framework for thinking about the future of their businesses. Settling for businesses success in the past is a common mistake that many business owners make. The most significant tool is simply planning. Using strategic planning will allow the owner to understand the focus of their goals which will regenerate the company and promote growth in the future. When a business is struggling, business owners must address the problem and will need to prepare a plan to ensure their business needs. It is essential to communicate effectively with family members to ensure that everyone agrees with one another. By not doing this, the owners become overwhelmed and usually tend to make hesitant decisions that harm the business. The owner of a family business has the responsibility of acting like a mature businessman who excels in leadership skills. A business man occupies a strategic role in American life and serves as a symbol of our culture. Therefore, in a family owned business, the person in charge of making executive decisions must realize that the decisions made affects not only themselves, but everyone involved in the business. This includes other family members in charge, the staff, and even the customers. The most important quality for a businessman to have is the capability to set a good example for everyone involved in the business and to effectively lead others in a positive way. Leadership refers to an individuals ability to influence, motivate, and enable others to contribute toward organizational success. Practicing powerful leadership skills can help keep the family business running strong. Another highly important thing that businessman must understand is business ethics. Business ethics is the study of proper business policies and practices regarding potentially controversial issues, such as corporate governance, bribery, discrimination, corporate social responsibility and fiduciary responsibilities. The owners of a family business are responsible for making moral decisions. It is important to respect and treat everyone equally. Practicing and understanding business ethics is essential for keeping a family owned business running smoothly.