In Part II of this series, we continue our look at some of the major reasons why many family businesses have failed and may fail yet if such issues are not effectively addressed.
Lack of Grooming, Lack of Succession
When the head of the business neglects training someone as a replacement or does not effectively consider a succession plan, a level of business chaos can ensue when the business lands in the lap of the second generation and quite frequently by the third. Sometimes an owner will simply 'groom' the wrong person, a family member not equipped to manage the business or staff well.
Other times the leader is simply too busy to mentor the second generation in a meaningful way. The longevity of a family business depends upon effective management training. Ignoring this aspect can result in the business falling into a family member's hands with no adequate experience for holding the reins.
Non-Family Need Not Apply
Sometimes a family business fails by failing to recognize when it needs to bring in outside help to fill some pivotal role. Of course, even when someone from the outside fills a pivotal role there may be considerable unease among the other family members who did not sanction the decision to hire from the outside. It often happens that family members of an existing business do not have the skills or talent needed to move the business forward. In such cases the business can stagnate while its competitors roll more effectively with the changing times.
Next week: I Love You, You’re Hired
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