Well-run family businesses can have significant advantages, according to www.uschamber.com. They tend to have a higher degree of internal loyalty and commitment, and customers often want to give their business to family-run companies with good reputations. They also are known for their high level of focus and long-range orientation.
However, family businesses can be affected negatively when family affairs and nepotism supersede important business decisions, affecting growth. Additionally, there can be internal battles among children and relatives or a lack of shared purpose among family members from different generations, which can foster distrust and poor communication.
Operating a family business successfully involves leveraging the advantages of a loyal, committed group of employees while putting the success of the business ahead of distracting family concerns.
Professor John Davis, who leads the family enterprise programs at the MIT Sloan School of Management, says the leader of a family business needs an “owner’s mindset” and must have a plan to transition into growth opportunities, with an emphasis on developing nonfamily talent and letting go of practices–and people—that do not add value to the business.
It is important to ensure any relatives working for the business are completely aligned with the company’s purpose and goals. Additionally, all employees must have a clear understanding of leadership roles, the level of family involvement and the opportunities available to nonfamily members. Family businesses should not shy away from bringing in outside talent.
Finally, do not let decisions about growing and managing family wealth intermingle with decisions about who controls the company and how it is run.
