How to Prevent Your Family-Owned Business from Failing

Which hotel is considered as the largest lodging company in the world with some 2,600 owned or franchised properties, operating in 65 countries and is worth some $ 8.441 Billion U.S dollars? That's right; it's the Marriot chain of hotels.

The Marriot group started out as a D.C root bar stand in 1927. The company was started by the couple J. Willard and Alice Marriot. Later on, the company expanded into hotels and restaurants. Currently, their sons run the company's two main divisions, Marriot International and Host Marriot luxury hotels division.

What does it take to become a Marriot? Are you willing to become a Marriot? Find out more on the next tip.

Tip No. 6 - Diversify

Family business often fails because they just confine themselves to the industry where they started.

While it is true that the core business should be given importance, as this is the bread and butter of the family business, other businesses that are connected to the core business must be considered. Most big family owned businesses are a group of companies involved in several other businesses that are often related to each other. Some of them even operate on business areas that are not related to each other. But there is an advantage if the business is related to each other. For example if the family's core business is a trucking company, then perhaps another avenue of business wherein the family can engage in would be a truck repair shop or a gasoline station.

Diversification is a way of not putting your eggs in the same basket. If one industry fails or there is a crisis that affects the core business or the other businesses then the entire family business empire will not suffer and collapse.

In Diversification it must be borne in mind that each business is completely separate and distinct from each other. One company should treat the other company as if it is dealing with another company outside the family business. This is important for the survival of each business. If a company is losing, the said company must bear its own loss. If one company is earning, the corporate earning must stay in that company and not be diverted to the losing company, except when profit has been declared in the earning company and is given to the owners and the owners decide to invest their own personal profits in the losing company.

Each company must come up with its own strategy as to how to survive. However, despite the autonomous existence of each company, they should also cooperate when it comes to dealing with each other. Instead of buying resources or engaging the services of companies outside the family's group of companies, each individual company must first consider buying from a member of the group of companies This will strengthen further each individual companies as the profits are just contained within the group.

The great Henry Ford once said "Anyone who stops learning is old, whether at twenty or eighty. Anyone who keeps learning stays young. The greatest thing in life is to keep your mind young."

Ford not only preached what he practiced but he practiced what he preached. Today, Ford Motor Corporation is one of the largest family owned companies in the world with revenues amounting to $ 163.4 Billion U.S dollars. It is a pioneering auto firm now in it's 4^th generation. Henry Ford started the company in 1903. He never stopped improving his production systems and procedures and always learned new ways of doing his business. He introduced mass production and dominated the early auto market with the model T. In 1960 his grandsons Henry II and William ran the company. Today, William's son, William Jr. is company chairman. Currently, Ford has acquired Volvo cars, and the Ford family still owns about 40 % of the voting stock.

Having an attitude of being teachable is what makes Ford one of the greatest companies in the world. This is the last tip as to how to prevent your family owned business from failing.

Tip no. 7 - Never stop learning

Too often family business will reach a point wherein everybody becomes comfortable with the status quo. It is often said that the enemy of the best is always the good.

Having an attitude of never stopping to learn new things is one of the greatest assets that a family business can have. Each family member must always be chased out of their comfort zones and encouraged to learn new things such as how to improve business processes, systems and procedures and the way of doing things. It is often said that the biggest room in the world is the room for improvement.

There are several ways how you and your family members who run the business could keep on learning and one of those is to join organizations within which your industry has operated. Industry organizations often conduct seminars, workshops and distribute materials on how to improve your business and all about the industry themselves.

Another way of cultivating a learning attitude is by going to school and taking courses that are related to the family business. A business course would often help. Reading books is also another good way to cultivate learning. Others involved subscribing to a magazine on family businesses and searching the internet for information.

An attitude of learning should spill over to the employees of the company. Some big businesses often put up a leadership and management institute or a college and university in order to train company personnel.

Researching on your company's market position, your competitor's position and the industry as the whole can also help boost in furthering the interest of the family company. In order to learn you will have to read. It is often said that leaders are readers. Not only do you have to read a lot but you have to be teachable and that you have an attitude of living above mediocrity. Always say to yourself that "There is always a better way."

It has often been said that everything rises and falls on leadership. The success or failure of your family business will depend on what you do today. Whether you will learn from the tips given here or whether you will decide to become one of the statistics of family-owned companies that failed.