A family business will generally have more severe problems in recruiting and retaining non family professional managers since upward mobility and advancement are restricted.
The dynamics for successfully managing a family business are blurred and often difficult to ascertain – is it a Family First Business or a Business First Family?
Because a family business tends to be more paternalistic in management style than a non family business, performance standards tend to be poorly described or non-existent for most segments of the business.
Because hard operations management information is scarce or not existent, outside advisors such as attorneys, financial planners, CPA’s and other professional counselors rely on perceptions of reality steeped more in “how it has always been” rather than “how much better should it be”. This is a crucial deficiency because it disengages the professional resources from serving both the business and the family as well as they could if they were dealing with timely, accurate and factual operating information about the business.
The management dynamics of a family business are often more consensual than action or performance orientated. Thus, a family business is generally not able to react to problems and take the required remedial action as quickly as a non family business.
The ego of an entrepreneur is such that they feel capable of doing everything themselves. Because they feel they can do “better” than anyone else, it is difficult for them to let go – either to delegate to subordinates or asking for professional help even when they know that help is needed.
Professional fees are often difficult to cost justify or value. The major contributing factor, however, is that a family business tends to procrastinate on bringing in professional resources until the “ox is gored and already in the ditch”. The analogy of the Fram oil filter commercial “you can pay me now or pay me later” is aptly applied to a family business situation except the consequences can be substantially more expensive when the survival of the business is at stake.
The family business is less objective about profitability and other types of performance standards – more forgiving or tolerant of people and the work management systems of their business. With a family business being orientated to consensus, harmony and friendship (we are all part of the family here at XYZ Corporation), CHANGE is a difficult process. Attitudinal platitudes such as “why fix it if it ain’t broke” prevail over the difficulties perceived with change. This is evident not only in the internal management systems of a family business but also to professional resources. Just as members of the management team are impacted by “the Peter Principle” as the business grows, that same growth problem impacts on the professional resources such as banking, legal and accounting. Unfortunately these changes follow generational succession rather than the more immediate needs of the business.

Approach as part of a process rather than as an event

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Our experience in dealing with the very unique problems confronting a family business suggests that professional intervention should be approached as part of a PROCESS rather than as an EVENT. This maximizes the benefit and minimizes the trauma of change. Furthermore, because the problems of a family business are generally multi-dimensional, professional intervention should best be introduced into the situation by taking a multi disciplined approach to avoid fragmentation and the waste of time and effort that generally occurs when a single dimensional approach is employed.

The first phase of the intervention process we normally recommend would include an OPERATIONAL ASSESSMENT of the business.

What opportunities are available in terms of profit optimization, cost containment or cost reduction?
What are operating parameters of the business and what changes in operational procedures or operational protocol might increase the ROI of the business?
What options are available for improving the health of the business, both internally as well as in the marketplace?
This OPERATIONAL ASSESSMENT provides the family business the facts and objectivity that are often obscured by the owner /managers being too close to the problems.

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