Fam­ily Busi­ness

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The sur­vival of a fam­ily busi­ness is based on strong in­ten­tions of the own­ers and not merely on luck. The ex­am­ple of Ja­panese ho­tel Ryokan Hoshi is quite rel­e­vant in this re­gard; it was founded in 717 A. D. and is run by the 46th gen­er­a­tion of the Hoshi fam­ily. Such foun­da­tions are nei­ther ac­ci­den­tally built nor through trial and er­ror. It is a con­scious choice to cre­ate a long- life com­pany by build­ing a strong foun­da­tion as a first step.

The ul­ti­mate chal­lenge for a fam­ily busi­ness is to bal­ance tra­di­tion with in­no­va­tion. The younger gen­er­a­tion in­creas­ingly looks for a work- life bal­ance in which their per­sonal and pro­fes­sional life has a clear dis­tinc­tion. See­ing their par­ents work­ing 24/ 7 has proved to be a big turn- off for most chil­dren. The younger gen­er­a­tion looks for a mean­ing­ful work at­mos­phere, where their per­sonal free­dom to ex­plore growth at their own pace is not ham­pered. They want to bring their per­son­al­i­ties into work­place, which is only pos­si­ble through shar­ing a per­sonal bond with the fam­ily el­ders other than the pro­fes­sional as­so­ci­a­tion.

It can be in­ferred that the com­mit­ment of one­self and the com­pany to the goal of a long and independent life is based on pas­sion. This pas­sion needs to be en­gen­dered in younger gen­er­a­tions, as it is their readi­ness which is re­quired for build­ing a long last­ing fam­ily busi­ness. This is mostly done by ex­pos­ing chil­dren to busi­ness prac­tices from an early age, en­abling them to earn ap­pro­pri­ate univer­sity de­grees, and re­quir­ing them to get com­ple­men­tary work ex­pe­ri­ence in other com­pa­nies be­fore join­ing the fam­ily busi­ness. These mea­sures lay the ba­sic foun­da­tion for nur­tur­ing the es­sen­tial lead­er­ship qual­i­ties for run­ning a fam­ily busi­ness.

Im­por­tantly, for a long­stand­ing busi­ness, it is not al­ways good to hear only what is pre­ferred and wanted un­der an au­thor­i­tar­ian sys­tem. Ac­count­abil­ity is the fore­most as­pect of any or­ga­ni­za­tion, which can be achieved by ex­er­cis­ing good gov­er­nance. This im­plies that the board should also com­prise non- fam­ily mem­bers who ad­vise on the ba­sis of their ex­per­tise and in­de­pen­dence from fam­ily bonds. Thus, the ill per­for­mance of a fam­ily mem­ber ex­ec­u­tive can be coun­tered with a rel­e­vant ac­tion of the board in or­der to avoid suc­ces­sion, con­flict and stress. In this man­ner the com­pany’s fu­ture is not con­strained.

Due to the in­volve­ment of emo­tional bonds, de­ci­sions of lead­er­ship tran­si­tion and fi­nal­iza­tion of agree­ments may get tough. There­fore, it is most im­por­tant to main­tain a ra­tio­nal and demo­cratic de­ci­sion- mak­ing environment which keeps the fam­ily mem­bers away from emo­tional stress and closer to the task in hand. A prior ex­change of views helps in build­ing strong un­der­stand­ing over such is­sues.

Ex­perts also high­light the sig­nif­i­cance of keep­ing a fam­ily busi­ness healthy with a re­li­able com­mu­ni­ca­tion struc­ture, where prenup­tial agree­ments, em­ploy­ment poli­cies and other cor­po­rate doc­u­ments en­sure a strong and last­ing busi­ness. This com­mu­ni­ca­tion is nec­es­sary as it ex­presses com­mit­ment, pas­sion and ac­count­abil­ity- based guid­ing rules for the busi­ness. In cases, where ex­ec­u­tives of a fam­ily busi­ness ne­glect the need of wills and buy­sell agree­ments, they eas­ily in­vite a self- cre­ated men­ace into their homes. Im­por­tance of com­mu­ni­ca­tion is also re­al­ized by the fact that it is not nec­es­sary for the fam­ily mem­bers to be well- un­der­stood by each other; there­fore a care­ful and con­scious hear­ing of the thoughts of the peo­ple en­sures a con­stant gain of knowl­edge.

By ex­tract­ing the pos­i­tives of the fam­ily busi­ness struc­ture, young en­trepreneurs are in­creas­ingly at­tracted to­wards this busi­ness do­main, although with great adap­ta­tion by in­vert­ing the tra­di­tional fam­ily- busi­ness struc­ture up­side down

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