The challenges of growing family businesses

Business Family

A family business is one in which one or more members of the owners' family actively participate in its operation. In Mexico, most companies are family-owned, representing an important part of the national economy. In their early days, these companies usually have competitive advantages that allow them to survive and prosper in their first years. However, as they grow, these same advantages can turn into disadvantages that limit their development.

Advantages of family businesses in their early stages

Commitment and loyalty

Family members who work in the company are often highly committed to its success. This level of commitment is difficult to replicate in non-family companies, where employees do not have an emotional or personal connection to the business.

Flexibility and speed in decision making

As it is a small, family-controlled company, decisions can be made quickly and flexibly , without having to go through an extensive hierarchical chain. This facilitates adaptation to the market and the ability to innovate.

Disadvantages of growing family businesses

As a business grows, family dynamics that were once an advantage can become obstacles. Some of the most common disadvantages are:

Lack of preparation in key positions

Owners often tend to place family members in strategic positions without taking into account their qualifications or experience. This creates frustration among non-family employees, who may see their growth opportunities limited by the preference for family members. In addition, lack of experience can lead to operational errors that affect the company's performance.

Mix of family and work problems

When personal family problems spill over into the workplace, tensions arise that make it difficult to effectively manage the business. The lack of a clear separation between family and professional life can affect decision-making and coordination within the company.

Conflicts in the evolution of roles

As a company grows, more qualified personnel with specific skills are required. However, if family members placed in key positions do not develop at the same pace, owners face a dilemma : replacing a family member with someone more competent can cause family conflicts. This type of situation can affect both the business and personal relationships, putting family harmony at risk.

Recommendations to overcome the disadvantages

For a family business to grow sustainably and successfully, it is necessary to face these challenges with clear strategies :

1. Equal opportunities for all: It is essential that opportunities for growth within the company are based on the capabilities and merits of the person, regardless of whether they are a family member or not. This helps to create a fair and competitive environment, where talent is valued above family ties.

2. Institutionalizing the company: Formalizing the company structure by defining clear processes, roles and responsibilities is key to ensuring that performance is evaluated objectively. Implementing performance metrics can help identify both achievements and areas for improvement, without the family factor influencing decisions.

3. Create a board of directors and a family protocol: Establishing a board of directors that includes people outside the family and creating a family protocol that regulates the participation of members in the company can significantly reduce conflicts. This protocol should include clear rules on hiring, promotion and succession within the company, to avoid misunderstandings and tensions.

Conclusion

Family businesses have the potential to be highly successful, provided they are able to properly manage the advantages and disadvantages that arise during their growth. The key is knowing when to act with the heart and when to act with the head, to ensure that the growth of the company does not compromise the family unit or the viability of the business.

“A family business that learns to grow with its head and not just its heart not only ensures its future, but also creates a lasting legacy for new generations.”