Family Business: What's the Real Challenge?

What can hold a family-business back? Unfortunately, it’s not uncommon to see even successful family-owned businesses struggle to grow. When working with our clients, both family and non-family-owned, challenges typically surface in the following categories:

Fundamental business issues

Culture of the organization

Attitude towards change

Let’s explore each of these critical areas in more detail:

1. Fundamental business issues can be defined in two categories:

Growth: Strategy, Sales/Marketing, and Organizational 

Sustainability: People, Financial, and Processes

Family-owned businesses often face strategic challenges due to a lack of formal planning or differing visions among family members about the company's future direction. Organizational and people-related issues, such as unclear roles and responsibilities or difficulty attracting non-family talent, can hinder growth. Additionally, financial and process challenges, like balancing reinvestment with family financial needs or managing informal workflows, can create inefficiencies and threaten long-term sustainability.

Examine your company and ask the following questions:

• Is there a clear, concise written strategic plan that is aligned by all members of the team?
• Is there a current and future organizational chart outlining expectations, gaps and opportunities for advancement?
• Is recruiting, training, onboarding, and compensation putting the right people in the right seats?
• Does leadership understand what is “behind” the numbers and utilize a financial dashboard to guide decisions and increase the bottom line?
• Are marketing and sales efforts being tracked, measured and getting consistent results?
• Are processes current and effective, making the business more competitive and more profitable.

2. The culture of the organization as measured by the following characteristics:

Foundation: Trust, Conflict, and Communications

Results: Accountability, Courage, and Passion

Trust, conflict, and communication present unique challenges in family-owned businesses because personal relationships and emotions often intertwine with professional decisions. Misaligned expectations, unresolved family tensions, or perceived favoritism can erode trust and lead to conflicts that impact both the family and the business. Open, honest communication and clear boundaries are essential to fostering trust and ensuring business decisions are made objectively.

Consider the following questions:

• Is there real trust; that is, the ability to tell one another the hard truth and not be afraid to offend because of the positive intentions?
• Is healthy conflict encouraged to get the best ideas from different point of views?
• Is there 2-way communication that is understood at all levels of the organization with clear expectations?
• Are all employees, both family and non-family, consistently accountable to specific measurable results?
• Does everyone in the organization have the courage to make tough decisions and admit to mistakes?
• Are people engaged and passionate about the company’s vision?

3. Attitude towards change

Change in family-owned businesses can be a significant challenge, as older generations may resist altering established practices, while younger members often push for innovation. This tension can create friction, hindering adaptability and growth. Balancing respect for tradition with a willingness to embrace new ideas is essential for ensuring long-term success in a competitive market.

What is the company’s attitude toward change?

Consider the following:

• How much change can the organization handle with its current employees, processes, technology and resources?
• How fast can the company change emotionally, financially and organizationally?

So, what’s the “real” business challenge? It’s rarely ever just one thing but rather, some combination of the questions above. At Haefele Flanagan, we don’t believe that these challenges should hold your family-owned business back. Rather, addressing common issues can give a business the boost it needs. Find out how we can help; email Beth Renga, Director of Consulting Services, at beth.renga@hfco.com for a complimentary consultation.