Analysis Of Reasons For Short Term Life Span Of Family Businesses

According to statistics, the average life expectancy of Chinese family businesses is only 24 years. The reason is that the quality of operators is low. Generally speaking, most of the family entrepreneurs who emerged after the reform and opening up have low cultural quality, lack of knowledge and obsolete management concepts. They can not actively and quickly grasp the management concept of modern enterprises.

Worldwide, family firm The middle 30% can survive to the second generation, only 10% can "live" over the third generation, and its elimination rate is quite high. At the same time, many enterprises have succeeded in succession, and enterprises have developed more competitive cases in their children's hands. The author summarizes the success and failure factors of family business succession under various circumstances.

Reasons for failure:

First, there is no succession plan. Lack of succession plan is considered to be the main reason for the failure of many family businesses. When the founder is alive, his authoritative status still plays an important role in family and business. However, many family business owners began to plan inheritance right when they entered the age of 60, and some entrepreneurs were unable to make arrangements for their successes when they could not continue to lead enterprises. They are reluctant to quit because of the fact that once the founder plans to inherit the plan, he will experience a death ceremony early. As one of the founders has said, "making my inheritance plan is like actively arranging my funeral."

Second, pass the business to the uncompetitive or unprepared successors. In China, due to the long existence of paternal property inheritance, it is taken for granted that children are inherited from their parents. The rigidity of personnel mechanism and the exclusiveness of human resources are the biggest obstacles for private enterprises to adopt family management mode in further development. If entrepreneurs encounter irresistible factors, such as death or emergencies, family businesses will be hit hard or devastating if they are not replaced by well-trained successors.

Third, in the enterprise inherit It did not deal with the distribution of property in future generations. This is especially prominent in enterprises with more family members. When brothers are opposed to each other and their hands and feet are disabled, they often fall apart.

Reasons for success:

First, make succession plans ahead of time. A comprehensive succession plan is necessary for families and enterprises. It requires a process to cultivate successors. We must be prepared to grasp the power of enterprises and establish sustainable management. We need to get the affirmation, dependence and support of family members, employees, suppliers, customers and other stakeholders. We need to receive strict training under the guidance of detailed plans, and this is not accomplished overnight. The early development of succession plan of Chinese family businesses is an effective measure to avoid succession conflicts.

Second, cultivate successors. The second step in carrying out the succession plan is to train the successors. In the process of training successors, we need to continue screening and elimination of succession candidates. Succession candidates may take over a number of years and become leaders of enterprises. Therefore, they should not only be familiar with and master the professional knowledge and skills of production, operation and technology, but also have the leadership ability of a successful leader. The training of family business successors is usually in two stages: the first stage is to receive formal education from schools before entering enterprises, and to acquire the basic knowledge, management knowledge and professional knowledge necessary to learn from famous universities. The second stage is to enter the family business, some start from the grass-roots level of the enterprise, some start from the middle level of the enterprise, grow up in the practice of the enterprise, establish prestige with their own achievements, and finally take over the family business.

Third, formulate a reasonable modern system and get rid of " Human system To manage people and to manage people by "system". However, due to the complexity of the blood relationship and family relationship of the family business staff, although the enterprises have also established some rules and regulations, in this way of management instead of rules and regulations, the result often is that all kinds of regulations are merely furnishings, or only to the family members. In succession, if we can pass the perfect system, it will help the successor to maintain the stability of the enterprise in the initial stage.