Families involved in family-owned businesses benefit as well as the local and global economies. But many others struggle to survive. Every year, 100,000 family businesses are passed on to the next generation; about one-third of those businesses go out after that. Many small business owners struggle to ensure that they will be financially independent of their companies when they retire.
Running a business has pros and cons, whether it’s a tiny operation or a huge publicly traded enterprise. Family businesses do have certain special advantages and difficulties, though. Here, we examine the benefits and drawbacks of managing a family business and strategies for maximising the advantages and minimising the drawbacks.
Advantages of family businesses
A greater incentive to work hard
One advantage of having a family business is that your family members may put in more effort than the average employee or even at their previous jobs. Their extra effort could contribute to the company’s success since they have a stake in its success and want to be recognised as equal members of the team.
The money stays in the family.
The desire to maintain the money in the family is among the main motivations for joining family enterprises. When you run a business with members of your own family, the profits stay in the home, and everyone wins when it succeeds. Since the money arrives and goes from the same house, salaries might also be variable. With the support of this adaptability, small enterprises may negotiate the quickly shifting economy, where the income may never be fixed.
Disadvantages of family businesses
Conflict between family members
The main issue with working with your family is the tendency to bring any conflicts or confrontations from the office home with you. Being productive at work might occasionally be challenging as a result. It can be challenging to conduct yourself properly with your parents or partner in the store or office if you don’t talk to them at home.
A lack of family interest
Future generations in a family firm may feel enormous pressure to carry on the business even if they have no genuine interest. This may lead to a staff, or even worse, management, composed of disengaged, indifferent, and unenthusiastic relatives. Such a strategy would probably result in the termination of employment contracts in any other business. This is particularly difficult with a family business.
Practice good governance
Setting limits includes the management of family-owned businesses. People outside the direct family must be involved in good governance. Leading family firms all over the world use this oversight, which often takes the form of a professional, advisory, or supervisory board made up primarily of non-family members with a small number of family representatives.
Getting involved in a family company can entail entering an environment filled with demands. However, assuming the perspective of the elder generation can sometimes feel like attempting to squeeze a square peg into a round hole. Before entering a family firm, Union thinks it is essential to create a clear vision of yourself and your personal goals as well as the ability to effectively articulate them.