My family business started around 1 8 years back by my father and my elder uncle (fathers elder brother) joined it after 7-8 months. The business is distribution of surgical and pharmaceutical items to the hospital all over the eastern INDIA. 1. The Seed :- Stage 1 Finance Head Sales Head Production Head This is where I see my family business. In this level the firm has simple strategy I. E. The goal of the organization is very limited. This is the initial step of the family business’ existence. The business is entirely owned and managed by the founder(s).
Most founders might seek advice from a small umber of outside advisors and/or business associates but they will make the majority of the key decisions themselves. This stage is usually characterized by a strong commitment of the founder(s) to the success of their company and a relatively simple governance structure. Overall, this stage contains limited corporate governance issues compared to the next two stages since both the control and ownership of the company are still in the hands of the same person(s): the founder(s).
Perhaps the most important issue that will need to be addressed during the life of the founder(s) is succession planning. For the family business to survive into its next stage, the founder(s) should make the necessary efforts to plan for their succession and start grooming the next leader(s) of the company. The first stage of growth is known as The Founder Stage. A family firm generally begins by being owned and managed by its founders. While these individuals might seek some advice from specialists in certain fields (e. G. Banking or product development), they will make most of the decisions themselves.
Stage 2:- This stage is often characterized by high levels of commitment and passion by the owners who re involved at every level Of the business, and are driven by a need to succeed. This can be essential to getting a business off the ground in a competitive economy. This also means a fairly simple governance structure as all decisions will go through one key individual or a very small group who are in constant contact. Perhaps the most important issue to be considered at this stage of a business is succession planning. Stage 3 In this stage the group of people plays a very important part.
While the business might be in its infancy, if it’s to succeed, it’s never too early to start planning for the future. This means putting in place a succession plan and grooming future leaders within the business to one day take charge. This will ease a necessary transition in leadership at a later stage as the business grows and the founders’ needs and aims change. The entrepreneur has come to the realization that there is indeed a need for what he or she can provide. He is making a name for himself and, while the road is rocky, he can see the light at the end of the tunnel.
The entrepreneur still works hard, but now there are others to help share the load. And these are the group of unseen layer within the organization between the owner and the employees. They are part of the employees’ level only but due to better communication or relation an unseen layer is formed. Admit group of people Tech, Sales Stage 4:- The Value stage:- Establishing a proper and culture for the organization is the key aspect. The business is maturing and has created a serious niche for itself. People and systems are humming along and this business has become a cash cow for the entrepreneur-owner.
Life is good and the rewards are flowing from the pump priming which took place in stages one and two. If life could only continue in this stage the entrepreneur and everyone around him would be happy. Every organization has its unique style of working which often contributes to its culture. The beliefs, ideologies, principles and values of an organization form its culture. The culture of the workplace controls the way employees behave amongst themselves as well as with people outside the organization. The culture decides the way employees interact at their workplace.
A healthy cue True encourages the employees to Stay motivated and loyal towards the management. The culture of the workplace also goes a long way in promoting healthy competition at the workplace. Employees try their level best to reform better than their fellow workers and earn recognition and appreciation of the superiors. It is the culture of the workplace which actually motivates the employees to perform. Every organization must have set guidelines for the employees to work accordingly. The culture of an organization represents certain predefined policies which guide the employees and give them a sense of direction at the workplace.
Every individual is clear about his roles and responsibilities in the organization and know how to accomplish the tasks ahead of the deadlines. No two organizations can have the same work culture. It is the culture of an organization which makes It distinct from others. The work culture goes a long way in creating the brand image of the organization. The work culture gives an identity to the organization. In other words, an organization is known by its culture. The organization culture brings all the employees on a common platform. The employees must be treated equally and no one should feel neglected or left out at the workplace.
It is essential for the employees to adjust well in the organization culture for them to deliver their level best. The work culture unites the employees who are otherwise from different back rounds, families and have varied attitudes and mentalities. The culture gives the employees a sense of unity at the workplace. Certain organizations follow a culture where all the employees irrespective of their designations have to step into the office on time. Such a culture encourages the employees to be punctual which eventually benefits them in the long run.
It is the culture of the organization which makes the individuals a successful professional. Every employee is clear with his roles and responsibilities and strives hard to accomplish the tasks within the desired time frame as per the set guidelines. Implementation of policies is never a problem in organizations where people follow a set culture. The new employees also try their level best to understand the work culture and make the organization a better place to work. The work culture promotes healthy relationship amongst the employees. No one treats work as a burden and moulds himself according to the culture.
It is the culture of the organization which extracts the best out of each team member. In a culture where management is very particular about the reporting system, the employees however busy they are would send their reports by end of the day. No one has to force anyone to work. The culture develops a habit in the individuals which makes them successful at the workplace. Stage 5:- The next generation The second Stage is known as the Sibling partnership. This refers to the transfer of the ownership and management of the business to the founder’s children (rather than their own brothers or sisters).
This form of succession is quite common in family-owned businesses where there is an expectation that the business will stay in family hands. This stage allows the business to expand its market share, the introduction of new ideas and products, and expansion into new fields. Fresh leadership can usher in an exciting time of Roth, led by individuals with a personal stake in the business’ success. At the same time, governance issues tend to become more complex than they were at Founder Stage. There are more people in charge now and, if the business is doing well, business activities tend to be more varied.
Therefore, it’s natural that there will be greater scope for conflict and disagreement amongst leaders within the business. Favoritism and familiarity can also lead to discord and businesses run the risk of operating in a ‘causal’ manner, without formal business processes that are necessary for long-term business survival. Implementing these processes, developing an effective communications strategy, and looking to expand succession plans for management positions beyond the family base are all key considerations during this growth stage.
This is the stage where management and ownership have been transferred to the children of the founder(s). As more family members are now involved in the company, governance issues tend to become relatively more complex than those observed during the initial stage of the business’ existence. Some of the common challenges of the sibling partnership stage are: maintain ins siblings’ harmony, formalizing business recesses and procedures, establishing efficient communication channels between family members, and ensuring succession planning for key management positions.
Stage 6:- Structure:- Family dynamics can play a large role in governance. Public firms may face agency costs if the interests of owners and managers are not properly aligned but the costs can be avoided in family firms where the owner-manager has more at stake. However that doesn’t mean family businesses are immune to governance issues. They might result from things like favoritism towards other family members or failure to deal with spelling, but the company should have mechanisms in place to deal with such possibilities.
Succession is the final hurdle in the family business life cycle and it is when family relationships can be a problem. It is particularly challenging in the transition from first to second generations, when sibling disputes can override good sense. Unfortunately succession planning is often overlooked. A AD Waterholes Business Succession poll found that 76% of our small business owners don’t have succession plans. They are just too busy running their companies, with 45% still trying to determine what the plan would be. The other 31 % just haven’t got to it% still trying to determine what the plan would be.
The other 31% just haven’t got to it. Organizational structure is particularly important for decision making. Most companies either have a tall or flat organizational structure. Small companies usually use a flat organizational structure. For example, a manager can report directly to the president instead of a director, and her assistants are only two levels below the president. Flat structures enable small companies to make quicker decisions, as they are often growing rapidly with new products and need this flexibility.
The Business Plan, an online reference website, says small companies should not even worry about organizational structure, unless they have at least 15 employees. The reason is that employees in extremely small organizations have numerous responsibilities, some of which can include multiple functions. For example, a product manager also might be responsible for marketing research and advertising. Large organizations often have many tiers or echelons of management. As a smaller organization grows, it can decide to add more management levels. Roles become more defined. Therefore, it is important to know which people oversee certain functions.