Family businesses mix business and family relationships, affection and work. This makes them a special type of company that tends to make mistakes which, although common, can seriously affect the continuity of the family business.
In this article we review some of the most common ones.
All family members must know which hat they are wearing at any given moment. Business families live daily with the risk of forgetting that in the family business the noun and therefore the main concept is “business”. “Family” is only its adjective.
During the first and second generation the internal organisation may be simpler, but especially as third generation members enter the company, who no longer have such close family ties with each other, differentiated and specialised governing bodies have to be developed.
Even then, in the family business the same people often sit on different governing bodies. Bringing in talent from outside the family helps to introduce new points of view and avoid this problem.
The finances of the company should not be confused with those of the family. The company cannot be the family’s current account, but neither can the family act as a bottomless pit that contributes money indefinitely to the company.
In family businesses, it is advisable to have a training plan for the progressive involvement of the new generations in the management of the company. By creating an environment that favours the imprinting of the entrepreneurial spirit, it is possible to a certain extent to pass on entrepreneurial skills and will. However, total success is not guaranteed.
Here again we are faced with the obligation to look for external talent to fill the possible gaps in the profiles of the entrepreneurial family. Honesty and self-criticism are indispensable for the survival of the common project.
There must be no taboos when it comes to communicating about the company. There must be a free, open and empathetic dialogue between the different members of the family, especially with those who do not work directly in the family business. Otherwise, it can lead to the creation of opposing factions.
Most commonly, the new generations are increasingly educated. This is a great asset for family businesses as long as the dreaded disaffection with the family business does not arise. Let us not forget that the most educated members of the family are also those who have the most options when it comes to choosing where to devote their professional lives.
To avoid this, it is important to gradually involve young people in the day-to-day running of the company, always respecting their freedom of choice. And above all, we must avoid conveying a message of tiredness, anguish, worries… Being an entrepreneur requires a great effort, but we cannot expect the next generation to face it as a sacrifice.
Every family business is a complex entity with its own characteristics. But at the same time it faces a series of perfectly foreseeable challenges: generational succession, professionalisation of structures, tax planning, etc. At Confianz, we have advised many family businesses in their preparation for challenges that could have put an end to their continuity. That is why we know that good planning in time is the best way to guarantee a long life for the company. Because what is good for the company in the long run is also the best for the family.
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