Read these posts before you risk everything. This post is about 3 negatives of family owned business.
Our last post highlighted the massive challenges along with 3 positives in running a successful family business. Considering those hurdles, why would anyone want to engage in such an endeavor? The truth is that, despite the minefield, there are many examples of successful family owned business and the rewards outweigh the risks. Consider these 3 hurdles in a family owned business:
The early days of any small business start-up are scary. A tremendous amount of hard work and personal sacrifice is required for success. Few people will believe in your dream and even fewer will share the burden. The opposite happens when the news spreads about your new success and your wealth. You will suddenly have more friends and family than you ever new existed. That sense of entitlement can be demoralizing. It often plants the seeds of defeat in your once successful venture.
Communication and collaboration are cornerstones of a sustainable small business. Emotionally charged issues between family members within the business erode effective communication. The inverse relationship between effective communication and personal quarrels is clear. The more hostility between family members, the less effective your collaboration will be.
The sense of entitlement and the breakdown of communication eventually lead to disloyalty. A major strategic advantage of small family owned business is loyalty among family members within the leadership team. This sort of loyalty drives higher productivity and profits. The multiple, unfortunate, and often avoidable, factors that erode loyalty lead to crumbling management infrastructure. Disloyalty is often spurred by old quarrels that occurred before the business started but were never settled.
Finally, tread carefully when starting a business venture with family members. It is a myth that family members make great partners. Study your family dynamic well. Be aware of sibling rivalries or other dysfunctions. These wounds may bleed your new small business to death.
For more excellent guidance on success in small business, check my favorite top 3 sources:
No, I do not get paid to promote these links and these guys do not know me personally.
What experiences do you have with family owned businesses? Please share your thoughts.
Family Owned Business is a series of blog posts about the exciting, rewarding, often challenging, and always unique elements of family owned small businesses. No, we are not talking about the Mafia. Family members make great partners, right? Wrong!
- Failure to Communicate