The importance of management in a Familly Business

At an international level, it has been proven that only 30% of family businesses survive after the second generation, 13% survive after the third and only 3% from the third and onwards. In Greece, we have examples of big firms that were created by leading Greek entrepreneurs and shrunk or destroyed when they passed to the next generation.

The management of a family business requires skills in order to balance the business objectives with the needs and expectations of the family members. Over time, new challenges are being introduced, the complexity of relationships and interdependencies between family members and business grows.

As one generation succeeds the other, it is difficult to answer the dilemma "Family First", which means that the family defines the identity of the business and it is the top priority in business planning and decisions, or "Business First" which means that family goals focus on the financial results and the company's resources are not used for personal reasons but also that positions in the business depend on the holder's skills and abilities.

Two basic principles that should always be followed by the family business management are:

1. The decision-making process should involve as many family members as possible. It is easier for family members to commit themselves to implement a decision in which they were part of even if they disagree with it and
2. Management cannot and should not act as an "investor" but act in the interest of all parties involved (business, employees, society, family and other shareholders). This means that the goal must be to hold the property (business) of the family and its successful transfer to future generations.

The parameters on which the management of the family business is based on must be:

1. The recording and evaluation of the views of all the members involved.
2. Have a mutual understanding of objectives and potential points of conflict in line with everyone's expectations.
3. Rules are used consistently and over time by everyone.
4. Modify past decisions to reflect family values and interests, as well as business needs.
5. Develop the relevant culture in the family to commit to the family business from a very young age so this culture to be transferred from one generation to the other.
6. Develop a strong emotional bond with the business.
7. To have guidance, which aims to protect the interests of the business and
8. Have the will to sacrifice short-term profits in order to reinvest them and increase the value of the business in the future.

The above principles must always be taken into account by the family business management, especially when the culture is more family oriented. Otherwise, it is very likely that conflicts will arise and in the end the family will "ruin" the business.

This article intends to inform the reader and in no way substitutes the specialized consulting services. For more information, please contact MDC Stiakakis SA (Monis Kardiotisis 49, Heraklion | +30 2810 280985)