The Family Business – Part II

Posted: July 12, 2013 in Family Businesses
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It has been my experience that a family business gets into trouble when .. the business gets into trouble.  I have worked in a quite a few troubled businesses and the shortcomings of management become evident. Here are a couple of the usual disclaimers:

  • “I don’t know what has happened to the economy and our market?”
  • “I don’t have any more capital to put into this place.”

Both of the above bullets are correct in: (a) management never watched the market very closely so, they certainly would have no idea what happened in their market (b) the scion of the family has ALL of his/her  livelihood tied up in their business.

There is a third bullet that I will now elaborate on: The newest (family) members in the business don’t have any experience running a business or in any of the key components of the business like: operations, sales and marketing or accounting and finance.

A family business that has been in business for 25-50 years has no guarantee that it will be around in the future. The weaknesses inherent in a family business become obvious when the business gets into trouble.

New competition, new technologies and better delivery of service is something that catches the family business off guard. The bromide of delivering great customer service misses the point. Customers expect great service from any business. Large corporations are adjusting to a new paradigm and small businesses must learn to do so as well. Unfortunately, the family business that refuses to get out in front of the market and their customer pays .. and pays dearly.

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