Why family businesses collapse or go bankrupt.

I was reading up on an article where a popular retail chain is almost closing shop due to in-house wrangles by the family. Another retail chain some time back also found itself in the same predicament so it got me thinking, 

Why do family businesses 

collapse or go broke?

There are a number of different reasons I thought of why family-owned businesses collapse and go bankrupt. Some of the most common causes include;

• Poor succession planning

When a family business does not have a clear and well-defined succession plan, it can lead to conflict and confusion when the current owner retires or dies. This can lead to poor decision-making and a decline in the business's performance.

• Lack of professional management

Family businesses often rely on family members to manage the business, even if they do not have the necessary skills or experience. 

This can lead to poor management and decision-making.

• Nepotism

Nepotism is the practice of hiring and promoting family members based on their relationship to the owner, rather than their qualifications. This can lead to a need for more qualified employees in key positions, which can hurt the business's performance.

• Conflict of interest

Family members who own and operate a business together often have competing interests. This can lead to conflict and disagreements, which can damage the business.

• Financial mismanagement 

Family businesses can be susceptible to financial mismanagement, such as overspending, poor budgeting, and excessive debt. This can lead to financial problems that can force the business to close its doors.

Now the reasons have got us to another question, now that we know what causes the in-house wrangles in family-owned businesses, how do we reduce them, or the bigger question after that should be, how would you prevent the in-house fighting in your present or potential family-owned business to meet the same predicament?