Challenge : Mr. Jong Kok suggests his businesses need to adopt more formal processes such as documentation of business report every month and structure as they mature. The challenge is to adopt the formality necessary to grow as a business without compromising the benefits of being a family business.

How to overcome ? : Normally, small family businesses suffer from professionalism,  absence of expertise in the areas of finance, marketing etc and revolve around a single person. Therefore, to be more professional, he can recruit part time professionals,  consultants and go for training could be engaged to overcome this problem.

 

One of the example of the professionalisation challenges in the family business is to adopt the formality necessary to grow as a business without compromising the benefits of being a family business. 

 

To overcome this challenge, entrepreneurs should challenge conventional management wisdom. They should do the things what others tell them cannot to be done. Entrepreneurs more likely to break out of prescribed moulds and determine their own futures rather than the live by rules made by other people.

1)      The Challenge: Lack of Succession Plan: A family business did not have an effective plan pose threats to family enterprises such as the threats of family conflicts, letting emotions run the business, and losing non-family employees and no succession plan.

2)      To Overcome: The family business should put in place succession plan that can ensure that the enterprise moves from generation to generation. The family business should follow a four-state process in planning for succession which is initiation, selection, education and transition. 

The way on overcoming the professionalisation challenge above is to endevour to incorporate their enterprises with Corporate Affairs Commision (CAC) to be in better position which can lead to having mission and vision statements, operate with functional boards of directors, engaged in strategic business plans, attract good hands and have the ability of attracting reputable consultants and high credit rating. 

One of the challenge in family business is lack of strategic planning and succession. Not having any plans that are effective and pose a threat to the family company. No other spirit or have other interests outside of their business or want to maintain a strong image of a business because the business is already well-known in the local area or in any other country.

One way to overcome it by establish the succession plan. Succession planning is very necessary to ensure that businesses can be passed from one generation to another. However, it is very important to carefully planned succession process before going any disaster befall a business owner. Managers and business owner must identify the role of active and inactive all family members involved in the business. It is recommended that family businesses follow a four-state process in planning for succession which are initiation, selection, education, and transition. Through these steps, it can help family businesses establishes outside interests, creating a solid financial foundation for retirement, as well as confidence in the ability of successor.

To overcome: Hire professional services firm to increase the professionalization of the management and within the field. For example,  accumulating and codifying knowledge surrounding wealth management, growth, internationalization, and family succession.

Challenge will occur if there is no any strategic planning in any particular family firm. Lack of strategic and operational planning will lead to less succession. Without planning, any firm wouldn’t be able to further increase it succession. More threats will arise and the firm won’t be able to withstand it, thus causing it to close down. There are several firm that still doesn’t have a detailed and systematic business portfolio review which is should be carried out to identify the non-performing businesses.

Lack of strategic and operational planning in a firm can be overcome by a creation of well-defined approach to succession. A firm’s owners must know the process of business strategy. It is needed to accommodate the needs and demands of family members and introduce external profesional managerial talent where critical competencies are absent within the family. This approaches can enhance the level of professionalization in a particular firm.

In family business, the most challenging factor is professionalism itself where it is hard for the family members to put aside the personal matter and focus only on their work. One of the issue is sibling rivalry or conflict due to satisfaction on governance in the business itself.  Besides, having a family working together, they might be arguing over small matter or acting unprofessionally.

In order to overcome this issue, a family business can make an agreement which stated that any matters that unrelated to business concern must be put aside. The strict action must be taken for those who breach the agreement. This will develop the professionalism while working together

Secondly, a top management can promote healthy competition among siblings where the position offered must be based on skills and qualification to avoid bias. 

Finally, trust issue in one of the challenges where any work and decision must be made based on procedures and protocol in the company to achieve efficient and effective result.

 

In family business the most challenge is Lack of transparent and professional. The challenge like this will give the negative impact to the management in the company. This is due to the person that involved in the management of business is not really know about their responsibilities. This challenge actually must to avoid because the long of person that manage the business the more probability business will down. To make the successful profit in the business is must have the good management in the business.

How to overcome it
The family business must make the best decision to choose the best person for manage the business. The selection can be done by meeting all of family. This will can the best person that have higher responsibilities and most confident can take the position as a manager. This is will reduce the Lack of transparent and professional in the family business. 

One of the professionalization challenges is high operational costs. When there is high operational cost in professionalizing a family business, it will be very hard for them to compete with other businesses. Because high cost in input (raw materials), machinery, spare parts and other consumables, energy and so on. 

To overcome this high operational cost, they should identify all the taxes that need to pay such as to local governments, to state governments, and then to federal governments. They can make a budgeting where their operating cost cannot more than the budget. Besides that, they must calculate all the cost carefully in the business. They must fully use their resources without wasting all the resources that available in their business. 

-Challenge:  how to encourage coming office ,what action should he take to make fair with every worker and how to help him to solve his problem without always absence.

To overcome: Be professional, follow the annual leave rule and give warning letter.

The example of emotion challenge is divorce, separations, health or financial problems also create difficult political situations for the family members.

How to overcome

Becoming a professional and learn how to separate personal and work problem.

Challenge - Sometime it more happened to accountability in finances.

For first case, there are two man handle a business and one of the man’s wife was handling the finances. Besides, the thing about lending money to family members. This action can be categorized as one of the worst things whose did it. The probability is to get back that money in time maybe around a half of hundred percent.

How to Overcome It - Thus, the other man unsatisfied with that situation because of that women is on the side of the other man. Here need the neutral person like somebody non-related that runs the finances. Instead of someone handle finances on one side. Second situation, try to create some principles that business money is for business purpose only in other word is separate the entity of owner and the businesses

This professionalization, however, seems to be a tough task for every family business because most of the family members are not professionals but they are still holding high positions due to their initial contributions to the business. Some of the senior family members even refuse to leave their current positions as it represents their status and pride. Though they remain on their positions, they are lack in pursuing long term goal which can increase the risk their family’s wealth and control of the business. Besides that, another problem arises from family members who involved in organizational structure is that this informality often leads to a lack of strategic or succession planning, and can limit the business’ access to outside expertise and capitalization. 

Thus, the priority way to overcome this ongoing challenge is to set up a new and formal organizational structure. Proper management and replacement of the positions for family members will be conducted in order to professionalize the environment of the workplace. Recalled to the initial objective of the business, understand the needs of the business and remain family members who are professionals and are able to contribute without involving in prejudgments and bias. In some ways, simply taking family members out or minimizing their role may not be conducive to achieving the outcomes. Nevertheless, reduction of family roles in family business is necessary if those family members are not capable in their tasks anymore. To become successful, entrepreneurs have to break out of prescribed mold and determine their own futures. 

The Challenges: 

Succession Planning- Sooner or later in every family office, the time comes when it is necessary to pass the reins to the next generation. Having a clear and detailed plan in place to help manage this critical transition is essential to the success of your business. 

To overcome this challenge is by clearly defining company goals and outlining the roles and responsibilities of every family member, you can avoid internal conflict and ensure the continuity necessary to maintain growth and protect your bottom line.

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The challenge : the father have to decide whether to choose his son or other people to lead the                  company.

How to overcome :  The father must be fair to the son and the other candidates. If his son is really capable to handle the job, he must give the position to the son. If not, he must choose other people to replace him so that the future of company is brighter.

The example of professionalization challenge in family business is the company need to adopt more formal processes and structure. The challenge of professionalization is to adopt the formality necessary to grow as a business without compromising the benefits of being a family business.

It should build family or non family management teams that provide complementary skills at the top and set benchmarks for running the family business professionally. This is to sends a clear signal to non family managers that career opportunities are available. Moreover, it should involve non family managers in business planning and succession planning. 

 

The challenge that can occur in professionalization is elder and younger generation in the family business has a different opinion on the approach, style of functioning and outlook toward of the business journey.  Members of the younger generation are less committed to the members of the older generation in doing a task or work together. There is also some agreement made by a family business makes the members of the younger generation became the owner or manager of the business. Normally, businesses that lead by the younger generation cannot develop properly due to a lack of experience in the business world. In addition, task or works that do by younger generation in business are also less efficient.

This problem can be overcome by giving early exposure to the younger generation in the business, such as appointing a younger generation working from the lower position in that company. They must be given adequate prior experience before providing higher position to them. In addition, younger generation should familiarize themselves in business operations and gain a better understanding of what the company are doing. When they have enough knowledge and exposure in the business world, then they can be appointed to high positions. The benefit of the younger generation is that they have a conscious, independent and likes to take risks in running a business.

However, there are also some professionalization challenges that need to overcome and solve in a family business. For example, one of the professionalization challenges is board of directors might be the non-family members in the family business. This is because sometime the outsider business expert is needed during the professionalization of a family business in order to get professional advice and guidance on business matter. However, conflict and argument might happen between the non-family members and the family member in the family business. Therefore, an open communication is needed in order to overcome this professionalization challenge and ensure the sustainability of the family business.   

The leader of family business need to do something to retain their employees and make them feels that the firm’s success benefits them as well as your family. If not, the employees will not motivated by the career of job. Consider  that allowed employees an ownership stake or initiate creative compensation scheme. Besides that, give some bonus or offering some share of the firm’s profits can help their interests with the firm’s and motivated to stick with the firms.

 

Challenge: The problem is that this informality often leads to a lack of strategic planning. For example unwillingness or inability to change such as the company and strategic plan must be quick and able to adapt as market conditions change.

How to overcome: People in that company should recognize risk and take action for their company before anything bad happen to their company. This is because the first thing that we should do in the company is preparing the best strategies it is to know about risk for our company in future. Without the best strategies the company will did not have a goal to achieve. 

The challenge is lack of succession plan. Lack of strategic and operational plan will not help the business to go further. There will be more threats arise and if there is no enough plan to backup, they couldn’t withstand it and lead to close down the business. 

How to overcome the challenge is by creating a strategic plan before started any business. A firm owner must know the process of business strategy. The family business should follow the four state of  process in planning for their business succession which is initiation, selection, education and transition.