MSG Team's other articles

8837 Data Localization: An In-Depth Analysis

Ever since the internet has been invented, the world has become a global village. This means that at the present moment, data can flow freely all over the world. However, many countries are not happy with this arrangement. Countries like Russia and China are already trying to enforce data localization laws which would inhibit the […]

11100 Role of External Consultants in Business Continuity Management

In previous articles, we have discussed how risk management teams and the management can help in planning for contingencies. In this article, we look at the role that external consultants can play in formulating and shaping a company’s business continuity planning. For starters, the biggest advantage that external consultants have over in house risk management […]

9076 Effect of Business Process Outsourcing (BPO) on the Workforce

The previous articles have discussed the impact that the BPO phenomenon has had on the economies of the home and the target countries. This was essentially a macro level perspective about how the BPO sector has impacted these countries. In this article, we drill down and look at the effect that the BPO sector has […]

9979 International Logistics – A brief introduction

Supply Chains ride on Logistics Networks and IT Applications/Internet. In this topic a brief introduction to each of the Logistics Function/Industry is attempted. The foundation of logistics function is based mainly on Transportation by Road, Rail, and Air & Sea. Maritime trade has existed since times immemorial. History is replete with the major maritime routes […]

10508 Operational Benefits of Six Sigma

Six Sigma Project initiatives help the organization in a wide variety of ways and at very different levels. This article describes the immediate operational benefits that an organization derives as the result of implementing a Six Sigma project. Makes The Organization Systems Driven Six-Sigma efficiency is impossible to achieve if the mode of production used […]

Search with tags

  • No tags available.

Family owned businesses have been the norm from the time of the industrial revolution and in fact, they were the mainstay of the business world in the early decades of the 20th century.

With the advent of technology and the services sector, the rise of the professionally managed organizations was evident.

In this context, many family owned businesses seem to be failing before the second generation takes over.

The reasons for this are many and they include making the second and the subsequent generations obligated to take over the running of the company, making all family members part of the business, and operating in silos instead of being generalists who can have a broad perspective.

On the other hand, the lack of a clear succession plan once the family patriarch or matriarch dies or retires is also a reason for failure.

Finally, infighting among the family members over who would lead which segment once the founder or the head of the family dies or retires is another important reason for failure.

Family owned businesses could avoid these traps by ensuring that they do not pressurize the younger generation to enter the family business when they are not inclined to do so.

  1. By forcing the next generation to enter the family business, the elders often make the younger lot commit to endeavors for which they are least equipped.

  2. Next, the family can grow faster than the business and this makes the task of including everyone difficult. Often, the case becomes difficult, as the business might not have the bandwidth to support all the members.

    This can be resolved by ensuring that only those family members with the aptitude and the skills as well as the attitude and temperament are asked to join the business.

  3. The third aspect is the fact that many family members remain stuck in narrow areas of specialization and fail to develop the general skills needed to run the family business.

    This can be resolved by ensuring that non-family members are promoted based on merit and not only on familial ties.

Apart from these factors, the lack of a clear succession plan and the disunity among family members is often a reason why many family businesses fail to survive into the subsequent generations. This can be seen in the way several corporate houses in recent years have either split or have been sold off because of these reasons.

Hence, these traps can be avoided and the family owned businesses could survive into the subsequent generations by following some of the practices that management experts have prescribed.

Finally, in these times when there is a rapid turnover of ideas and concepts, it becomes imperative for family businesses to retain their competitive edge in the face of the onslaught of competition.

Hence, they need all the energy and the foresight they can to avoid some of the reasons for failure.

Article Written by

MSG Team

An insightful writer passionate about sharing expertise, trends, and tips, dedicated to inspiring and informing readers through engaging and thoughtful content.

Leave a reply

Your email address will not be published. Required fields are marked *

Related Articles

How a typical Business Continuity Program Works ?

MSG Team

Introduction to Business Continuity Management

MSG Team

Business Continuity Management Planning around the World

MSG Team