Article Advise

submitted: Aug 26th 2008 | by: Dr.MarcR.Dussault | Total views: 1 | Word Count: 381 | |

A critical and often overlooked factor in your company's success is the company's organizational structure. One critical area to look at is whether your business is a family business or not? Some people wrongly assume this makes little difference to a company's effectiveness; however, research proves this is a dangerous assumption to make.

Research suggests that 70% of the family run businesses that do not succeed (family owned companies have a life expectancy of just 24 years) fail because the owner/manager did not appreciate the dynamics of managing such a family business.

What is a family business? The definition of a family owned business has been the subject of much debate however for the purposes of this article I will keep it simple. A family owned business is one in which a family own a majority stake (ie.51% or more).

Given that there is usually at least some conflict within families, it is fair to expect that with the added pressures of commercial practice this conflict will be magnified in a family business. It is important to acknowledge this potentiality and reality because when you do acknowledge it you can plan for it and put in place systems to manage it.

Another key area to look at it is succession planning in your family owned business. Succession issues in family businesses are markedly different than in non-family businesses, especially so in an industry that is fragmented, unsophisticated, and vulnerable to powerful outsiders. It is vital to the long term survival of family businesses that the leaders engage with this issue and create a workable process around it.

Another key aspect to look at is strategy formulation. Strategy, of course, is important for any business and it is vital not let any family 'politics' get in the way of creating and implementing the right plan for your company's growth.

In terms of making sure your family business or one that you work for survives the critical thing is to maintain open communication and actively plan ahead and put in processes for these issues.

Obviously the points in this article may have different degrees of relevance depending on how much family involvement there is inside the company, however this article has attempted to give a general overview of the sort of things to think about and act upon.

About the Author

Author: Dr. Marc R. Dussault gives expert advice on how to navigate the potentially difficult issue of family business succession planning within a family-run organization. Visit his site to learn more about the challenges and solutions around company succession

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