MSG Team's other articles

9929 Information System for Talent Management

Introduction Information technology and system have changed the way business gets conducted. Every decision-making process is enhanced with utilization of an information system. Information systems have been deployed by human-resource team to enhance employee employer relationship. Companies require great deal of contribution from employee for its success though information systems have made several processes automated. […]

10018 Inventory Health – Important factors to be considered to avoid Inventory Mismatch

Any inventory of raw materials or finished goods runs into thousands of SKU items. Especially in case of Raw Material Inventory as well as Spare Parts Inventory these numbers could be much higher when compared to Finished Goods. Even in Finished Goods some products like clothes, grocery etc could run into thousands of SKUs across […]

9203 Top 5 ERP Solutions Providers and their Pros and Cons

Introduction Enterprise resource planning has been the forefront in providing efficiency and productivity solution to the companies all over the world. In the global and competitive environment, it is essential for companies to have some sort of ERP in place. Enterprise resource planning ensures that deployment of resources take place, and company can monitor them […]

12817 Companys approach to Inventory Health

Inventory means an item of value and asset in the books of the Company. This is the most important category of item that needs to be focused upon by the management for in its management lies the business efficiency as well as profits. Inventory holding is a must for any business organization that is into […]

10866 Quality Management vs Quality Control

Project Management is the art and science of managing projects with emphasis on quality, cost and time. If we take the aspect of quality, this is one of the factors of the “triple constraint” that govern the art of project management. Quality is defined as the degree to which the project meets the requirements (PMBOK, […]

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