Family Businesses- Challenging, Exciting, Resilient or Else ??

It is??naive to consider any business??that does not?face any challenges.?These challenges can be internal?to?your?business,??revolve around?the decisions which the businesses make?.

?These challenges can also be external ,??combating the economy, combating?uncertainty?.?The Businesses undoubtedly are under stress?to be cash surplus , profitable?in order to keep their head above the water.??This is easier said than done?when it comes to?a family?group.

?Let us define what?a family?group is -?Family?group essentially has a?founder chairman?who has founded the group .?This pedigree then gets?transcended?down to other family members-?brothers, sons, daughters?and so on.?There is a?family lineage,?family?tree and the ownership?gets restricted to the family members. Family-owned businesses are not immune to these challenges.

?They?do?face , unique set of challenges?due to the family structure with?the?shareholding getting restricted to the few.?

What?are typical??characteristics and?challenges?of a family business which makes?it unique :

1.???Concentrated decision making :?Founder Owner rightly?believes that by virtue of?the empire being built by him, he knows the best.?There is nothing wrong in this belief ,?as this remains??the fact?. This thought process, does lead to concentrated?decision making?many times with the founder owner, and?at times?his tacit or?direct?blessings are a?must?for a?decision.

2.???Unstructured / Structured?Business Environment:?I have seen some?family?groups being very structured where?every decision is well thought off. Some are extremely unstructured where?there are plethora of?knee jerk reactions , and , decisions are often?made by heart than head.?Physical, emotional and financial problems among family members can significantly??impact the day-to-day operations and running of the business.

3.???Ambition:?Family groups are generally driven by the?urge to grow fast . They have the empire, and the past accolades?to back this belief.??They have better appetite to take a risk .

4.???Informal culture:, The??informal culture found in many family businesses can?lead to?lack of documentation, policies, and defined strategy and goals., which?can work?against the ambitions which the family?groups generally have.

5.???Opportunity?to grow:?Indeed?there is an opportunity to?grow.?Family groups?have more hunger to grow regardless the situation, and therefore?if you have?the courage, conviction?and ability to deliver the results,?you have made your day.??

6.???Managing families and ownership:?This is the most challenging aspect when you work for family?groups.??Every?family member can have different?vision,??different aspirations.??Your ability to influence the stake holders?is?fully tested .?If you are willing to put across your points??with logic,?facts and?figures,??it is?possible to?convince the family members. This process , can be?lengthy and require patience, passion and?persuasive skills.

7.???Lack of training.?The informal culture found in many family businesses can result in an?easy to go?approach to training new employees.

8.???High turnover of non-family employees and equally loyal employees:??It?is?interesting to know that the?employee turnover in the family businesses can have two divergent?outcomes. There?is high turnover of employees, who are not comfortable dealing with the family ownership . This happens more at the senior level.?You also have loyal employees who?remain with the family through thick and thin. They?trust the family and?family trusts them.?Generally ,?these are people who have been?with the?family?group?for many years, and many decades.

9.???Funding Needs :?This?is an opportunity as well as a challenge.?Family owners???have an inherent urge to grow, fuelled by the capacity to take risks.??A huge challenge for family businesses can be to find out from where the capital?and other funds??are generated .??

10.??????????????????????Business Involvement:?Some?of the family members may be deeply involved in the businesses, while others?may be involved peripherally .?While family members may not always have the same opinions as individuals , they often have similar upbringing , albeit with varied?life experiences which may lead them to have?their?considered?view on?the business. Businesses certainly?need to have external views of their company and their competition in order to thrive.

11.???????????????????????Succession Planning?:?There is a general reluctance??to establish a clear succession plan.?This?has much to do?with maintaining the status quo, lest it creates?misunderstanding issues with other family members. Owners of family businesses may have varying opinions on the value of their business, or even worse, they may have no knowledge about the value of the business and what things contribute to or detract from that value. Further complicating this matter is determining how to split the profits of the business or owners’ stakes or the withdrawals??in?the?business .

12.??????????????????????Leadership issues :?leadership issues plague the family businesses?unless??conscious efforts are made to streamline , and?arrive at clear way forward.

Why?I?find?working with family groups exciting?and innovative :

1)?Need for out of box solutions:?There is a consistent need to provide??solutions?to the demands, wish list of the family ownership.?Some of these demands, wish list??may be?absolutely “ No,?No’’ to plan and?then to execute, some of them only?family ownership can imagine, some are very intelligent , some are pure risk ventures.??As?a CFO,??providing out of box solutions?is a?pre requisite for you to do justice to your job.

2)??Managing uncertainties?:?Family?groups due to sheer urge to?grow, invariably expand their businesses?into related and unrelated areas of??their?niche core business.?A typical?family?group?is involved in?almost different and diversified businesses?from trading, manufacturing, construction, contracting, interior fit out, services, health sector,??retail , distribution,?refinery and many more businesses.?This??makes it so exciting to handle?and triumph over these diversified?businesses as also the vagaries surrounding these??diversified businesses.

3)??Constant??actions?, less bureaucracy?and emphasis on end results?:?Most of the family?groups have some semblance of?being “unstructured?’’ .There are not?many well defined processes .?The?hunger to get the end results , ensures that these groups are hugely action driven and those who can??give end?results are far more precious,??far more valued??than those who??get caught in a?process or get bogged down by?the?bureaucracy?.

4)?Changing dynamics:?One can never be certain how the family ownership reacts to a?situation, to an individual. There are umpteen cases?where?today’s heroes are tomorrow’s zeroes?and vice versa.?This is more so in those groups where the ownership is split within many?family members.?Is it not interesting?to work in an environment?where , you are expected to understand ,?manage and triumph over these dynamics ?

5)?Responsibility, Accountability, Authority?Galore:?If?you want responsibility , accountability?and authority in abundance , then ,?working with family?groups is indeed the place .?Reverse is equally?true.??Families reward sheer performance and accountability rather than following a standard protocol regime?to reward employees. It comes as no surprise,??then, that?two?people at the same level?can get rewards , significantly different , in a family group.

6)?Tackling complex??business situations:?This can be?as complex as managing family disputes, managing the different family members with different background with varied aspirations to managing as simple as knee jerk reactions?from the family ownership. It all happens.

7)?Bringing a paradigm mindset shift?: Indeed,?this is the most?rewarding aspect of working?with the family.?There is nothing more satisfying than knowing?that?you have played a role in bringing significant mindset change in the family ownership. I call it?a paradigm shift.

I am often asked if I would like to work outside family??groups.??My answer is in negative.

Do I?really want to miss out on the challenges, the?thrills. and the?above excitement ?

As they?say:

‘’ Thrills ,??Spills, Fills?Galore. More than one life term’s worth.”