An Analysis of the Reasons for the Success or Failure of Family Businesses such as Clothing

According to statistics, the average life expectancy of Chinese family businesses is only 24 years. The reason is that the quality of operators is low. In general, the majority of family entrepreneurs that emerged after the reform and opening up have low cultural quality, lack of knowledge, and obsolete business concepts, and cannot master the management concepts of modern enterprises actively and quickly. As far as the world is concerned, 30% of family businesses can survive to the second generation, and only 10% can "live" the third generation. The elimination rate is quite high. At the same time, many companies have succeeded smoothly, and companies have developed more competitive cases in their children. The author summarizes various situations and summarizes the success and failure factors of current family business succession.

Failure reason:

First, there is a lack of inheritance plans. The lack of an inheritance plan is considered to be the main reason for the failure of success in many family businesses. When the founder was alive, his authoritative status still played a pivotal role in the family and business. However, many family-owned business owners started planning for inheritance rights when they reached the age of 60. Some entrepreneurs have not been able to make arrangements for what is behind them when they cannot continue to lead the business. They are psychologically reluctant to withdraw, because once the founder has designed an inheritance plan, it means that he will experience a death rite early. As one of the founders said: "Formulating my succession plan is like actively arranging my funeral."

Second, hard-hitting the company to non-competitive or unprepared successors. In China, due to the long-standing patrilineal inheritance, Zi Cheng’s father’s business is taken for granted. This rigid mechanism of employment and the exclusivity of human resources are the biggest obstacles faced by private enterprises in adopting the family-style management model in further development. If entrepreneurs encounter irresistible factors, such as death, or emergencies, family businesses will suffer heavy or devastating attacks if they are replaced by untrained and prepared heirs.

Third, the problem of property distribution of future generations has not been dealt with when carrying on corporate heritage. This is particularly true of companies with more family members. After the brothers turned their backs and their hands and feet were crippled, they often fell apart.

Reason for success:

First, develop an inheritance plan in advance. A comprehensive succession plan is essential for both family and business. To come to nurturing requires a process, we must be prepared to grasp the power of the enterprise and establish a sustainable business, need to obtain the affirmation, dependence and support of family members, employees, suppliers, customers and other stakeholders, need to be carefully planned Guided by rigorous training, this is not an easy one. Early formulation of the succession plan for Chinese family businesses is an effective measure to avoid inherited conflicts.

Second, train the inheritors. The second step in implementing the succession plan is to train the heirs. In the process of fostering inheritors, it is also necessary to continuously screen and eliminate inherited candidates. Succession candidates may take over the enterprise several years later and become leaders of the company. Therefore, they should not only be familiar with and master professional knowledge and skills in production, operations, and technology of the industry, but should also have a successful leader. leadership. The cultivation of heirs in family business is generally in two stages: in the first stage, before entering the company, the school receives formal education from the school and learns the necessary basic knowledge, management knowledge, and professional knowledge from famous universities. In the second stage, we entered the family business. Some started from the grassroots level of the company, some started from the middle of the company, grew up during the practice of the company, established prestige with their own performance, and finally took over the family business.

Third, we must formulate a reasonable modernization system to get rid of the "man-made" administrator and the "system" administrator. However, due to the complexities of blood and kinship among family business workers, although the company has also established some rules and regulations, the result of this type of management that uses human beings instead of rules and regulations is that the various rules and regulations are merely furnishings, or Only works for people outside the family. When inherited, the system can be passed down, which will help the successor to maintain the stability of the company in the initial stage.