Every business needs a plan to deal with unforeseen circumstances, but the dynamic of family businesses presents a unique set of challenges.
Credit: Family business image via Shutterstock
No business owner wants natural disasters, data loss, equipment breakdown or other disruptive circumstances to occur. But as many small businesses have learned, these threats can strike when you least expect them, and your preparedness for such unforeseen events can mean the difference between survival and failure.
Every business should have a plan in place to deal with a crisis, but when a company is owned and operated by a family, its unique dynamic can present challenges that nonfamily businesses may not have to face. David Scouler, principal at business financial consulting firm Scouler and Co., knows firsthand how difficult it can be to prepare for disasters within a family business setting.
"Many family businesses don't acknowledge the real financial state of the company or watch long-term cash flow closely enough," Scouler told Business News Daily. [5 Ways to Make Your Family Business Successful]
The two keys to handling unforeseen circumstances in any business are preparation and teamwork, Scouler said. Preparation comes into play for anticipated threats, such as damaging storms or power failures. These "What if?" scenarios can be practiced and accounted for in a disaster-recovery plan, so that every employee knows what to do. Unanticipated threats to a business — market and economy changes, technological innovations and other situations that can't really be rehearsed — require a strong team dynamic.
"In some cases, the decision [of what to do] is up to the owner, and the team will have to do what he or she says," Scouler said. "In other cases, it will be something where the business needs all hands on deck, and has to find the best collective thinking about what to do from here."
Family ties within a company can put the senior team in a difficult position when it comes to making the right business decisions, especially for unexpected threats. In addition to being prepared for crisis situations, family business owners need to be ready to face some truly tough calls that may end up hurting them one way or another.
"Peaceful relationships within a family often take priority over good, solid business judgment," Scouler noted. "It's often painful when someone has to make the choice between doing what's best for the company and what's best for the family."
When two assets as important as your business and your family are at stake, it's vital to know whether you're prepared for the unknown. As a business owner, you should ask yourself if there's something you can do ahead of time to guard against these types of circumstances, and whether you'll be able to handle any changes they may bring.
"If you're not prepared or in a good position to help [your team], it can become an internal threat to your organization," Scouler said.
Originally published on Business News Daily.