Financial issues in a family-owned business.

Financial issues in a family-owned business.How to succeed in running a family-owned business.

Be it turnover or profitability of a firm, financial issues in business are highly pegged on the strategic management of an entity. All businesses that exist, exist to make a profit, and FOBs are not an exception. It will be a misdemeanor not to discuss how important corporate governance influences the financial affairs in FOBs.

Is it a result of a past system that was not working? Let’s wrap our mind in one of the models developed by Edward T. Hall in the 1970s, The Iceberg model. This model shares most of the aspects we are going to look at today when discussing today’s topic on financial issues in organizations, especially FOBs.

Relationship between Iceberg model and financial issues in well established FOBs

Hall had thought that there are some of the visible aspects and those that are not those beneath likewise in FOBs there are some aspects that tend to have the same traits as those reasoned in this iceberg model. Hall had figured out five factors that made up his theory and we are going to relate it to our area of focus. those factors are discussed below.


At this, one is supposed to observe and describe what is happening that is creating a point of concern at that particular moment. Say the firm has operational risks that are closely noted to be caused by finance matters or maybe the firm cannot run because of the huge liquidity risk it is exposed to it forcing the business to a stalemate. Having sufficient information on the matters at hand can work as a step further from this case since it will be easily identified whether the crisis at hand even so for one to make well-informed decision professionals always stress the need to have sufficient information on the matter this one should not be an exception to this rule.


This determines whether those factors identified have happened before in the organization and if so what trends they seem to follow. Most of the time this stage is useful when the firm wants to anticipate, plan and focus and more importantly to explain what might be causing these patterns, for its only at this point that the controlling family member invites inputs from various sources one of them studying closely to their close competitor but not so much that they miss the peg in their eyes. This will help the firm to be certain whether those financial crises are also experienced by others in the same industry.


Identification of things, procedures, and other determinants like behavioral factors that contribute to the occurrence of these events are then seen openly. This is also the moment when support is needed to create rules of the game should the firm decide to change any of their bedrocks in management. Taking an example of high turnover rate can affect the business especially when an individual family member wishes to pursue other dreams or is just bored with the family business and quits to focus on other opportunities making it hrd for that vacant position to be filled or in some instances where some family members just don’t get involved deliberately pushing the burden work on few people who eventually bow down because of lack of motivation and social loafing among other negative effects of peer pressure

Mental models

These comprise of the shared beliefs and assumptions that take active roles in the development of the problems that are experienced. One thing with family is that they tend to act uniformly and so whatever decisions made will be made on assumptions that it is for the good of the family even though the principle that guides artificial persons still have to come down to the family that owns the business. This can be dealt with when the business invests in the training of their staff, those whore both staffs and family members and equally those who are just employed by the business. The training should be able to instill some level of practices that could help curb the negatives or setbacks that mold faulty structures that trigger financial problems. 


FOBs being no exception, every organization needs to have properly set objectives that act as the anchor point of their strategic plan, this plan gives purpose to the existence of the organization.FOBs can make steps of progress in the journey to successfully make it by doing several things among them is having better succession plans so as the family business can have perpetual succession unlike the way they are seen when the family member passes on, which is unfortunate and those left behind lack competence of running the business in his or her absence making the business to go south in no time, businesses can also invest in eternal views like conducting reviews and assessments to ensure the policies that are were set have been done to a satisfactory level and if not diagnose where it went off the track.

In conclusion just like this model helps individuals and organizations to expand their perceptions of a situation to see within the context of the whole system and limit themselves to looking at just a single activity or event, it should also help in shading light on the issues that revolve around financial issues in privately owned businesses, especially the FOBs.

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