Family business tends to remain in existence for a longer period of time compared to sole entrepreneurship. Research indicates that 30% of family business proceeds to the second generation while 12% proceed to the third. In most cases of sole entrepreneurship or partnership, the business ceases existing in case of death or termination of the partnership.
It’s not easy to start and run a family business. Remember, you have to pull everyone to a common goal and vision. Most businesses fail due to lack of a unified vision and objectives. Moreover, you have to ensure that every family member treats it like a corporate business. Additionally, sharing of resources and income can cause ordeals.
The question that arises is why most family businesses succeed and run for a long period of time. This article aims at enumerating and providing an elaborate reason why family businesses succeed.
Unified Vision, Innovation, and growth
Every member of a family business has a purpose and vision to make the business successful. Unlike public funds where employees work for their targets and income, family business work for the continuation of the business. The frequent fails in partnership are mainly linked to lack of similar goals and visions.
The primary aim of a family business is that the business runs from one generation to another. In this manner, they have a laid-out plan on how to meet the vision of the firm. Moreover, they have a succession plan and they work on developing the next team of business leaders.
Financial experts say that succession plans such as change in management leads to success. Everyone works to their level best to ensure they are qualified to be appointed as the next team of management.
The current management work to their levels best to ensure they propel the enterprise to the next generation. This is achieved by strategically planning for the business on a frequent basis. They also assemble an independent board to provide oversight to the management board. Also, they ascertain everyone aligns with the values and vision of the family.
Most successful businesses around run on the basis of trust and honesty. It is typically the biggest determinant in success. The relationship of family members is based on trust. This makes the business running since problems with the finances, management, or supervision won’t be witnessed. Additionally, customers tend to generate confidence and trust with family businesses.
Heading in the same direction is very crucial in any business. Families are brought together due to their unity. As follows, they are capable to place the interests of the business ahead of their self-interests. When there is unity, communication and decision making becomes less complex. These are the common determinants of the success of a business.
When in need of making a decision, there won’t be a hard time trying to convince everyone. Every family member is given a chance to contribute their views and ideas until they come with a general goal. This is easily achieved since everyone has the same vision and goals.
To ensure unity prevails, they convene frequent family meetings to educate other family members about the business. Moreover, they build conflict resolution skills as well as instilling the features of effective communication skills.
Ethical Standards and Values
Studies indicate that 85% of family business are run by ethical standards and family values. Additionally, 60% of enormous businesses in the world are operated based on a certain code or ethical practices.
Ethical standards and codes helps individuals to produce the rational decision on serving their fellow employees and customers. Family ethics and codes are usually strict based on the foundations of the family.
Family businesses are looking more than just revenues. This means that their business decisions are guided by values and ethical practices rather than the profit. This tends to entice customers.
Not all about the Money
Success is not only determined by the finances. However, experts suggest that business success is determined by the values in terms of visions and objectives. Most family businesses work towards providing an economic opportunity to the community particularly in terms of employment. Bearing this in mind, you will work towards success.