Business management is a very important skill which should always be taken seriously. Many businesses have failed because of poor management. However, many investments have succeeded as a result of the management approaches put in place in steering them. While it is a good idea for a family to invest, it has become challenging for many people to properly manage their businesses. In most cases, rivalries arise especially when the family members fail to agree on how to manage their businesses. At times, each individual, despite being a stakeholder, might only want to serve individual interest. This has posed a very great challenge to such businesses.
Governance is an important concept which should be effectively used in managing family business. Although such investments may be owned by family members, it is advisable for them to ensure that they perceive the business as a different entity which requires professionalism and commitments. Meaning, there should be a recruitment of professionals to spearhead all the operations of the business. This is necessary because a family, despite heavily investing their resources into such businesses, might not be equipped with managerial skills. Hence, it necessitates a proper design in the structure of family businesses.
In order to ensure success for such businesses there should be a clear mark on the role of each of the stakeholders. Meaning, the shareholders, Board of Directors (BoD), Family Council, Family Office, the Chief Executive Officer (CEO) and the top management should be clearly defined. Since each of them occupies a significant position, there is need for them to be involved in the management process of the organization. Given that the major goal of business is to make profit, it necessitates the family members to ensure that they delink it from them. Otherwise, if they assume the role of the CEO, BOD and the top management, it will be extremely difficult for the business to grow. Otherwise, it may collapse because of the diverging interests.
As shareholders, the family members should not assume leadership roles which will make them be so strong to control everything in the business. Otherwise, they should limit their roles in funds allocation, recruitment of the non executive Board of Directors and ensuring that there is a steady growth of the business. On the other hand, the board should work in collaboration with the shareholders and the executive management. As an integral part of the business, the board should ensure that it offers appropriate advisory services which will help in the day to day operations of the business. On the other hand, the executive top management should be concerned about the planning, organizing, coordinating and controlling all the day to day operations of the business. The only truth is that each of them can manage to deliver their best services to the business, is to grant them an opportunity to exercise their duties.
A family business can be of different ownership structures. These include the sole controlling founder, sibling partnership and family dynasty. In this case, sole controlling founder refers to the type of business structure in which everything is under the control of one family member who invests his resources in it. Besides, sibling dynasty refers to a situation in which children join the business and manages it as a group. Here, they become the managers and top decision makers who come up with strategies on how to recruit staff and ensure that they carry out their duties without any problem. Lastly, hereditary business is a type of ownership structure in which children inherit the business from their parents. This type of ownership demonstrates that business is a different entity which can last perpetually long after the death of the founders. This implies that the family should ensure that it manages its business in a proper manner so as to benefit subsequent generations.
This discussion demonstrates that family business can thrive if right decisions are made. Since it it’s the investors, who bump their resources in their businesses, it should be incumbent upon them to ensure that they make profits. This is the primary goal for any kind of business. However, it is evident that they can only manage to benefit from their investments if they make right decisions. Evan though the may not be professional mangers, their managerial skills count. They should know that business is a different entity from them. Hence, they should engage a team of competent and highly trained professionals to serve in the board and managerial positions. Each of them should be treated with the dignity they deserve. Besides, they should be motivated to ensure that they deliver their best services for the benefit of the organization.
Conclusively, business is very important for everyone. A family should invest in business. These should be properly managed to ensure that they generate profits and last longer to benefit the subsequent generations. However, in order to do this, there is need for a proper coordination. Despite that the family can participate in running f the business as council or managers; they should constitute a reputable board executive manger to run its daily operations. This will eliminate any rivalry which may come from the family members who may be having diverse interests.
Works Cited
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