Can Family-Run Businesses Survive?

While it’s important to have love, harmony and shared values in family-run businesses, these factors may not be adequate to help them survive and succeed in a ever-changing and fast-moving world.

The challenges for some of these businesses are that they may not have the strength, size, scale, scope and speed of operation to ring fence themselves and expand their markets.

Many of their founders and successors tend to focus more on self- and family-pride than on progress, control than on competitiveness, and maintaining status quo than on sustainability

As a result, they face challenges to strengthen their business models, raise capital and other needed resources, attract and retain appropriate and adequate talents, and regionalise or globalise their operations.

If they are not well positioned and do not have access to essential resources to support long term growth, perhaps they need to put aside their pride and ego, and consider other ways forward instead of maintaining and improving a family-run business model.

To sustain their business, they may have to start by hunting as a pack and operate as a part of a loosely-coupled group, cooperative franchise, or other forms of strategic alliance.

They can move cautiously and progressively from operating with a large degree of independence to full interdependence, and by being partially integrated to being fully integrated with strategic partners.

By connecting, collaborating and co-creating solutions with the right partners, they can expand their customer and capital base.

As a group, they are in a better position to list their companies in a credible securities exchange. They can tap on the capital market to improve their offerings and spread their wings in the overseas markets.

One of the best ways to love their families may not be to have a family-run business but to have a well-run business.

By targeting, calibrating and balancing the appropriate internal and external foci, it can enhance the capacity, capability, and competitiveness to support continuity and continuous improvement of their businesses.

In a global economy, family-run businesses will have to evolve their business models. They have to ensure that their competitors are part of the buffet spread or they’ll end up becoming part of the menu.

http://www.straitstimes.com/business/harmony-vital-to-family-run-businesses

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