Family entrepreneurship: what it is, challenges and tips
Do you have a family business or want to know more about entrepreneurial families? Family entrepreneurship can bring a series of advantages to those who operate in this model, but it also brings unique challenges that need to be faced to ensure business continuity.
In today’s post, we will see what family entrepreneurship is, what are the main challenges faced by family businesses and some tips for maintaining business continuity over the years. Come and see!
What is family entrepreneurship?
Family entrepreneurship, as the name suggests, is related to companies run by families and passed from generation to generation. Typically, these businesses value the tradition and essence of the company’s early days, investing in strengthening the organizational culture over time. In this model, management is usually centralized and there is a strong environment of trust and learning.
Furthermore, family members can occupy different positions within the organization, in the same way that employees outside the family can also work in the company.
Family businesses face challenges that any small business knows well, such as financial management, sales management and attracting customers. But there are some specific challenges that these companies need to deal with to survive over the years. Next, find out what they are!
Challenges of family entrepreneurship
We have separated 4 challenges that are part of the reality of those who have a business with their family. Come and see!
Business succession and continuity
Succession is a challenge for family businesses and consists of the decision process of who will be responsible for the business in each generation. This is a fundamental element for the company’s continuity and needs to be well planned.
Likewise, if more family members are going to work in the business, this also needs to be structured. The idea is to take advantage of what each person has to offer for better results within the company.
Customer retention and loyalty
Customers make the future of the business. But to do this, you need to worry about your current consumers. And that means investing in retention and loyalty, one of the biggest challenges for family businesses.
On the other hand, one of the advantages of this model is, precisely, the proximity to customers. Small family businesses allow you to create a relationship of trust and credibility with your consumers, which avoids losing customers to the competition. But, to achieve this, family businesses need to focus on personalized and excellent service to retain consumers.
Maintain the essence and purpose
Anyone who works in a family business needs to remember that, in the beginning, it was created for a reason, which was what consolidated the business and won over customers, with a competitive advantage. Therefore, one of the challenges is to maintain this essence over the years, which is not always easy with a change in management.
In this sense, being clear about the company’s purpose helps family members keep that purpose alive. This applies to both the products and the service offered, even if they change or the business grows.
Tips for family businesses
Now that you’ve seen the challenges, check out 4 tips for building successful family businesses and maintaining their essence over time!
Customer service
Customer service is an important element for family businesses to differentiate themselves in the market, as well as being essential for retention.
Entrepreneurial families must create proximity to customers to consolidate a loyal audience. The idea is to attract more consumers through recommendations. And for this, offering excellent service is essential.
In this sense, some tips for offering a good service involve:
Innovation
For family businesses, it is important to follow trends to balance tradition and modernity. The idea is to modernize processes and adopt technologies, without losing the essence and purpose of the business.
Therefore, these companies must seek to maintain the organizational culture and, at the same time, expand the business. But the technologies implemented need to make sense for the company model. Therefore, it is interesting to audit your processes to identify bottlenecks and points for improvement, identifying which tools could optimize operations.
For family businesses, there may be a certain resistance to change, but it is important to understand that innovation can even help maintain the quality of the service offered by the business for years. Therefore, managers need to have an open mindset to incorporate trends when it makes sense and is necessary for the company’s growth.
Internal balance
As much as family businesses can benefit from the relationship of trust between members, conflicts can also happen. Therefore, to avoid fights, it is important to invest in conflict management and separate the personal from the professional.
Entrepreneurial families can achieve this goal with professional advice, but it is also important to have an internal movement, with training and alignment to make team members aware of organizational values and culture.
In this sense, self-knowledge is important. For each family member to be valued, it is necessary to understand how each one can contribute to the business. Here, everyone’s interests come into play, such as skills, training and professional experience.
Legal team
If you have a family business, it is important to have legal advice to align all expectations among the family members who will participate in the business. Furthermore, the legal team is essential to help entrepreneurial families with succession planning, to avoid conflicts and ensure the continuity of the company.
