The Potential Obstacles To Second Generation Family Owned Businesses (Essay Sample)

OBSTACLES FOR SECOND GENERATION FAMILY-OWNED BUSINESSES Student’s Name Institution Affiliation People have long been mesmerized by family businesses, but many fail to acknowledge the burden posed by passing the business to the second generation. The transfer of business to the second generation faces far more challenges than expected. Challenges exist in every business, whether a multimillion-dollar conglomerate or a small shop on the street. Second generation family businesses are run by siblings or members of the family when the founders retire or die. Lack of enough resources to run the business is a primary challenge that befalls the businesses. The execution of strategy to run a business depends on the resources available, and most commonly the founders tend to exploit the business before passing it to the next generation. Therefore, the second generation is left with little to invest and manage the enterprise leading to failure. Succession issues greatly affect second-generation family-owned businesses. Less than a fourth of family-owned businesses have done succession planning, and when it comes to managing the new deal conflicts arise (Neubauer and Lank, 2016). The family is subjected to various problems like decision making, running the business and legislative issues that arise in between. Eventually, the business lags behind as a result of succession problems. Regulations and taxes can be significant obstacles to the second generation owned businesses. The new owners are subjected to change of ownership and payment of government taxes. Sometimes due to the regulations, the family is forced to sell part of the business to cater for the extras. Transition into a new business becomes difficult at this stage. Research on second generation family-owned businesses su...