When you’re managing a family business, you’re facing challenges and important decisions to be made every day. Managing a business, big or small, is a complex work that involves several considerations when it comes to people and process management.
In this challenging time, many business owners face enormous challenges that affect their ability to thrive or keep the business afloat. Family-run businesses work to adapt to the change and create strategies that will help tide the business through the next phase.
Often, people think it’s much easier to run a family business, but nothing could be further from the truth. In fact, a family business is quite challenging as its longevity depends on a set of factors unique to the family that owns it. Here are some of these challenges and the solutions applied to each one of them:
Turning over the Business
Parents look to their children to continue the business they started. Often, this creates a long line of succession, and the pressure to continue the legacy becomes stronger as it goes down the line.
Succession is critical to any family business. In some cases, a family business does not make it into the third generation for several reasons: the children aren’t interested in the business, the business goals aren’t aligned with the goals of the new generation of owners. This results in the closure or the sale of the business.
While it could sometimes be easy to sell a company, it’s best to hire a team of experts to help you navigate the process and ensure that your business is in its best health for a sale. Aside from that, the right time and the right buyer determine how well the sale will do.
Once the business is sold, you can remain as a consultant, a senior member of the board, or an advisor. This can boost the saleability of the business, as the new owners can hit the ground running with the help of your knowledge, relationship with your suppliers and the customers, as well as the employees.
This setup is beneficial to all parties and helps facilitate change management and minimize disruption in the business.
Keep in mind: selling your business at the highest possible price will give you the funding that you can use for new and more diversified investments.
Relocation
In some cases, a family business can be a well-known brand in the local market but not outside the state or anywhere else in the country. As such, moving the business to a new location may not be an ideal option, especially for those with a niche market.
Moving your headquarters to your new location can affect the continuity of the business, but it can also serve as an avenue for the owners to take a risk and expand their market by relocating the business with them or setting up an e-commerce store instead of a brick-and-mortar shop.
There are plenty of advantages of moving the business online. For starters, they can continue catering to their current market while tapping into a wider market. Nowadays, more customers prefer online ordering; moving the business online is an affordable option for owners who would like to continue their business without investing in a new facility at the new location.
On top of that, it’s a great opportunity to start fresh in a new city or in a new state. The move can inspire fresh new ideas for the business to diversify its products and services.
Letting Go of Control
Many business founders cannot complete the transition because they find it difficult to let go of control. Some even decide to come back to the business two or three years into their retirement, as it’s not very easy to let go of something you’ve been doing for years.
Aside from control, it’s equally difficult to let go of responsibility and the sense of authority. Some even feel that the business has become part of their identity that not working feels like a part of them has stopped functioning altogether. With that said, one shouldn’t undermine the complexity of the process of letting go.
When people let go of their old routine, they often do not know what to do with all the time they have. To avoid falling into this void, a business owner must understand that letting go of the business, the responsibility, the authority, and their identity as the owner is bound to happen no matter what.
Letting go is a process, and business owners should plan for it just like they plan for starting the business. By doing so, the business owner becomes more aware of the timeline and will be able to build their financial independence based on the said timeline. This allows a business owner to gain financial independence and remain financially stable without being tied to the business.
Running a family business is hard work, but perpetuating it is an entirely different job. Planning for continuity, expansion, and retirement should all be part of the business plan. Planning for change allows the owner to navigate their options and make better decisions for the business, its employees, and the family as well. This will help owners face the challenges in running a family business daily and prepare for the ones they’ll be facing in the future.