Learn about the challenges of family businesses for 2022 and how to face them

Family businesses have become very important in recent times. This, because great potential has been seen and has become a boost for the economy of a country. In Peru, according to research carried out by the Inter-American Development Bank (IDB), family businesses in 2018 contributed more than 40% of the Gross Domestic Product (GDP), this because 80% of the companies in the country were family owned.

Earnings numbers are currently expected to be lower as many companies have been hurt by the political crisis, the pandemic, and other factors. 67% of family businesses in Latin America had a decrease in their income due to the arrival of COVID-1922% maintained it and 11% had an increase, according to a study prepared by the STEP Project Global Consortium and KPMG Private Enterprise.

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This has led many family businesses to seek ways to prevent events and maintain economic stability to stay current through the years. Enrique Pajuelo, director of the Association of Family Businesses of Peru (AEF), prepared a list of the challenges that companies have for this 2022 and how they can overcome them.

Align family and business vision:

This is an important challenge because the interests of the members of the business family must be ordered, whether in a professional, economic, patrimonial and even leadership and power nature. This will help to have a vision and thus achieve goals together.

Professionalization:

To achieve this, a decision-making and management model for the organization must be established based on economic and business criteria. Therefore, it is suggested to create a Family Council and prepare a Family Protocol. In addition, it is ideal to implement good Corporate Governance practices that include the General Meeting, Board of Directors and Management.

Management of family conflicts caused by the business:

A large part of the failures in the management of family businesses is due to family conflicts and discrepancies than strictly business problems. That is why it is suggested to work with open and respectful communication spaces. Family members must bear in mind that decisions regarding the company must be made prioritizing the well-being of the company over the family, since if the organization did not exist, there would not be a business family either.

Succession:

This should not be seen as a reason for economic and emotional disorders, but as a natural process of every company that must continue with its operations. During the pandemic, the fragility of the human being was demonstrated, therefore, it is convenient to plan and work on succession as an important and not an urgent issue. Preparing the successor or successors is a strategic responsibility, since in this way the continuity of the business is ensured.

Promote the entrepreneurial spirit and enhance leadership:

Entrepreneurship can be manifested or createdTherefore, it is important to raise the skills of current and future leaders. One way to promote it would be to allocate capital to new ventures of family members, which will go through an evaluation and approval of a family investment committee and in this way the capacities of each member will be evaluated.

With this information, many family businesses will be able to sustain themselves and successfully reach a second or third generation.