In family business, generally owners stay in present and are happy addressing problems of the day. Very few think about tomorrow. Those who think about tomorrow realise that tomorrow is not only a business problem, but is also a family problem. The more they think about it, the more it gets complicated.
On family front, the owners experience disagreements in style of working of different generations. The seniors view young as too fast and feel their way may put the business at risks, while the younger generation thinks that seniors take too much time to decide, which will lead to business losing out on opportunities to grow. Generally there is no platform to table these concerns and discuss it in an open environment, hence all the discussion happens behind the back and promotes grapevine among the family members. The result – everyone feels that the other party does not understand them and nothing is going to change in the business.
Growing family means family members will either demand place in the business or there is a pressure from family to join the family business. This brings up the issue of competence and compensation. Those who are playing significant roles and add significant contribution to the business feel the need for higher remuneration; but in reality family business generally operates on equal compensation to family members. This becomes a bone of contention and leads to groupism among the family members.
On business front, there are market side challenges, as the competition increases business starts experiencing declining sales. Investment in building infrastructure and rising overheads results into vanishing profits. As the business scales up, it demands different level of management bandwidth.
In this scenario, the important question is – Who’s job is it to chart the future of the family business?
The founder or the senior generation family members alone cannot do it, as they are unable to command the commitment from the next generation as well as they are not clear about the competence required for taking the business into next orbit. The heirs and successors cannot do it alone, their views needs to be accepted by the Senior Members.
What this means that unless both the generations partner and volunteer to work together; it will be difficult to chart out the future direction for the family business.
“Continuity” is more than survival of business in the future. It means where family members and non-family members continue to enjoy working in the business and build a sustainable business model for the new business environment. The way of doing things may change but the values and vision will remain in line with the family’s vision.