The Top 4 Threats to a Family Business (1 of 4)
May 14th 2008 01:54
The family business can be a wonderful source of joy and bonding, however, it is not free from problems. Businesses face numerous threats; regardless of what industry they are in, how big they are, or how long they have been around.
Family businesses face the same challenges that any other business must deal with, but also have some unique sets of problems that can arise. The first step in overcoming these problems is to recognize the four major threats to the family business.
1. Not Being Properly Financed
It is often the case, when starting a family business, that several family members have invested their own capital to get the company up and running. To get the investment capital, family members may have used personal property as collateral in order to get a small business loan from a bank. This could occur not only in the start up phase but in also in times of expansion.
After some time in operation, this money may run out while the business is not yet generating enough income to support itself, let alone pay back the bank loan to get the collateral back. If this happens, not only will the business be in jeopardy, the family will also suffer substantial monetary loss.
The simple fact is that things often cost more than we initially plan, and take more time than we imagined that it would take. Therefore, it is often better to underestimate how much money your business will be bringing in and overestimate how much it will cost to run your business.
This simple step in planning before getting a loan, or budgeting your personal allocation of money, will help to insure that you do not run short of money before you reach a sustainable volume of sales.
Family businesses face the same challenges that any other business must deal with, but also have some unique sets of problems that can arise. The first step in overcoming these problems is to recognize the four major threats to the family business.
1. Not Being Properly Financed
It is often the case, when starting a family business, that several family members have invested their own capital to get the company up and running. To get the investment capital, family members may have used personal property as collateral in order to get a small business loan from a bank. This could occur not only in the start up phase but in also in times of expansion.
After some time in operation, this money may run out while the business is not yet generating enough income to support itself, let alone pay back the bank loan to get the collateral back. If this happens, not only will the business be in jeopardy, the family will also suffer substantial monetary loss.
The simple fact is that things often cost more than we initially plan, and take more time than we imagined that it would take. Therefore, it is often better to underestimate how much money your business will be bringing in and overestimate how much it will cost to run your business.
This simple step in planning before getting a loan, or budgeting your personal allocation of money, will help to insure that you do not run short of money before you reach a sustainable volume of sales.
Money, Bills, Coins
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