Challenges Of Family Business

Introduction The Family firm has been important features of the business landscape for centuries and remains important today. They can be small, medium or large and has been seen in all sectors and in all three industrial revolutions. Throughout they have played the main role in employment, income generation and wealth accumulation. A family business can be defined as “a corporation that is entirely owned and managed by members of single family”. The family business is ideal in nature as they are loyal to the principles of the founder and thus ensure uniformity in their operations. Unlike any other form of firms ,even family firms also have stakeholders .Stakeholders are creditors, family members, debtors who play a key role in the day to

The Indian family business enjoys many advantages expected to their intrinsic characteristics and social culture that assist to their structures. However, the advantages can ruin if the family is not united; as the family expands the challenge is to keep a sense of unity. These are the set of typical challenges that Indian family businesses face today:

 The Next Generation The biggest challenge is the gap between family generations. A business founder is used to do their work by themselves .Thus the development and unique culture are present in Indian family business. Inward, looking, owner-centric, smaller scale, and with the restricted perspective and conservative mindset. This culture ultimately becomes difficult in the absorbing outsiders. The same culture also causes a major challenge in absorbing the next generation family members. Different generations’ looks the world differently is supposed to work together. It is the difficult thing as many of the young generation is often in a hurry and has big ambitions while their elders are more into the conservative and skeptical.

 Attracting and Retaining Non-Family

Unlike other even the family business, also faces many problems. Family business goes through various stages of growth and development over time. Most of the challenges will be found once the second and subsequent generation enters into the business. A famous saying about family owned business in Mexico is “Father, founder of the firm, son rich, and grandson poor “The founder works and builds businesses, the son takes the charge and poorly prepared and make it grow but enjoy the wealth, and the grandson inherits a dead business and empty bank account.

The major challenges facing family business during Succession are;

 Lack of capable Heir:

Business owners often get their children involved in the firms with the expectation that they will be able to groom a capable heir to take over when they retire. When it’s time to transition ownership, however, the owners sometimes notice that their child may not have the right combination of skills, education, maturity or even the desire to run the company.

 Bias against the planning

A successfully succession process takes place when the planning is done before hand only and all the modalities should be taken care off. But the owners frequently recognize that the succession planning as a bureaucratic and restrictive process. This bias will lead to the unsuccessful management transition in family