Family business challenges discussed

Paul Andrews, client service director of Grant Thornton in the UK, discussed the challenges faced by family businesses at a seminar organised by the Bank of Valletta.

Mr Andrews said that with so many different individuals and roles within the business, there are significant challenges that need to be addressed as a result of the people and relationship issues that arise.

Within such a scenario, one of the main challenges lies in seeking to balance the needs of the family with those of the commercial needs of the business.

Transition from one generation to the next was one of the biggest challenges that needed to be faced, he said.

The success of such transition periods lay in a clear understanding of the family and the business dynamics and the formulation of the necessary framework to facilitate harmony, equitable distribution, and business survival.

Mr Andrews also referred to the advantages and disadvantages of family businesses.

He said the strengths of the family business included strong culture, shared identity, less senior management staff turnover, sensitivity to the business, long-term perspective, increased responsibility, faster decision making and a clear and defined history.

Weaknesses included favouritism, lack of succession/ retirement/strategic planning, family conflicts spilling over into the business, reluctance to recruit the best person if they are outside the family, lack of professionalism and a reluctance to change.