The story of the family business is sweet and nostalgic, but it’s not always a success story. Many family businesses fail, and “Dallas” has covered all the common reasons they do.
Everyone dreads Thanksgiving because they’re forced to spend time with family, but what if every day is Thanksgiving? In family businesses, it’s common to spend 40-plus hours a week with mom, dad, grandpa, brother, sister, cousin, the list goes on. The stresses of running a business are already tough. Running a family business? That’s a whole different game altogether. There are many reasons why family businesses fail. They have to avoid these problems if they’re going to succeed.
The Next Generation
Family businesses are usually started by a passionate first generation. This generation puts in the hard work and suffers lean years in order to make the business successful enough for the second generation. Poor planning when it comes to passing down leadership is one of the main reasons family businesses fail. The Globe and Mail pointed to this as one of the 10 reasons such businesses don’t succeed.
When the next-in-line to inherit ownership of the business is ill-prepared to assume this control, the business is likely to fail. Think of it like this: on the new version of "Dallas," Christopher (Bobby’s son) and JR, Jr. weren’t ready to run Ewing Oil. Bobby and JR, Sr. had to step in to manage things on the business end, but this solution can’t last forever.
Encouraging your children to take over the family business may not be such a good idea. Harvard Business Review points out that children who are coerced into joining the family business may harbor resentment, which does not lend itself to a good work environment. To that end, children who are secure in the knowledge that they can always have a job in the family business may never take it seriously or treat the job responsibly. It becomes a second option. When other options exhaust themselves and these family members finally come into the fold, they have little knowledge or experience to bring to the table.
Most families don’t have as much drama as what you’ll find on "Dallas," but even a little bit of family conflict can go a long way toward destroying business. Small arguments about the lawnmower can lead to big disagreements about money, staff, advertising and all facets of the business.
One of the most common reasons for drama is the generational gap that’s often present in families. Younger generations are more inclined to change, more willing to try new technology and methodologies. Often, older generations balk at big changes and feel reluctant to replace systems that they feel still work well. This can lead to big conflicts that can derail the entire business.
Family businesses aren’t just about the immediate family. Extended family drama can easily come into play as well. Spouses, parents, children and other extended family members still feel that they have a vested interested in the business and therefore deserve a voice. To avoid lots of bad feelings that lead to conflict, provide a forum where all interested parties can air their grievances and concerns. Schedule a monthly dinner or outing in which everyone is free to have their say. This can help to dispel little resentments and pent-up anger that can lead to much bigger problems.
You can’t run a family business the same way you’d run any other business. Different dynamics are at play, and the strategies that work in traditional business will not work in a family-run affair. You don’t need to watch television to know that family complicates everything, especially when your livelihood and financial interests are all tied up together.
Always remember that family is a strong part of the dynamic. That means you need creative solutions to deal with problems. Encourage family members to get proper training and education, so everyone is suited to their roles. Talk to each other, both about the business and problems within the family, and take care of issues before they begin to infect the business. Respect the dynamics of the family business, and run it as a family, to avoid all the problems that make these businesses fail.