Family business management: types and main challenges

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When we talk about family business management, we are talking about private businesses that are controlled by members of the same family and that remain so over the generations.

For a company to be considered family-owned, it is not necessary for all members of the management team to be family, but it is important that ownership of the company is the foundation of the family's assets and that there is an intention to pass the business on to future generations.

It is estimated that between 80% and 90% of Brazilian companies are family-owned. Therefore, we have gathered the types and main challenges in managing family businesses, check it out!

Types of family businesses
Traditional family business
In this type, the management of family businesses is usually argentina phone number lead carried out exclusively by family members, they are privately owned and there is little or no financial and administrative transparency with other employees.

Hybrid family business
This model is already publicly traded, meaning anyone can become a partner by purchasing shares in the company on the stock exchange. However, control of the organization remains with the family, which holds the largest number of shares. There is greater transparency and the management of family businesses is usually carried out by hired and specialized professionals.

Family-influenced company
In this last type, the company is also publicly traded, but the family does not own more than 50% of the shares. It is still considered a family business management because the family owns a significant portion of the shares, to the point of having a strong influence, even if indirect, on the management.

family business management
Main challenges in managing family businesses
Managing family businesses is full of unique features and challenges that are different from traditional businesses. However, they have many challenges in common. We have selected the main ones and how to solve them below.

Succession in family businesses
Handing over the baton from one generation to the next is one of the biggest challenges for a family business. This transition period, in which the current manager hands over control of the organization to his or her children, nephews or other relatives, must be carried out over a period of years.

Ideally, the successor should familiarize himself with the company's routine, know all the demands and characteristics of the position he will hold and work in the business for at least a few years before assuming full control.

Power struggles
The more generations that pass through the company, the more the family branches out and power struggles intensify. The best way to eliminate or minimize this type of conflict is to establish formal succession rules that are known and agreed upon by everyone and that reinforce the need for professionalism and competence in new successors.

Conflict between family and administrative issues
When managing family businesses, it is important that relatives are hired for the right reasons. Even if they are people you trust, surround yourself with committed people who are competent enough to perform the roles.

Financial misalignment
As we have already said, in traditional family businesses, where capital is closed, there is little financial transparency and this can disrupt the company's finances.

To avoid this problem, care must be taken to define rules on profit sharing and withdrawal . Caps and pro-labors must be established, as well as minimum percentages for investments in certain areas of the company, always with the aim of promoting its sustainability and maintaining growth.