A Family Business
A Family Business is a company or organisation founded and managed by one or more family members.
It is one of the most overlooked forms of business and ownership, despite it being all around us, starting from a family supermarket, stationary store, or bookstore, all the way to large enterprises and multinational companies.
A family business can include many possible combinations; such as: siblings, spouses, parents and children, and cousins. It can also extend through many generations, and involved family members usually take the roles of board members, stockholders, advisors, and employees.
Starting, or running, a family business can be a very challenging feat; however, it is usually accompanied by numerous advantages; such as:
Family businesses are usually run by the same person, most probably the parent or eldest member, for a long period of time, only leaving their leadership positions in case of life events such as: illness, retirement, or death. This long-term leadership by the same person tends to lead to overall stability within the business.
Starting, or running, a family business is a venture by all the family members involved, and its success or failure will eventually affect each and every one of them. So, family members who work in the company or organisation, whether as board members, managers, or employees, will be more committed than anyone else to their work, and eager to achieve all their business’ objectives.
Willingness to Help:
One of the most important attributes in a family business is that everyone is willing to pitch in. They aren’t usually limited by job descriptions, roles, and responsibilities. If any of them is unable to do his or her tasks, others will gladly step in to help for the greater good of the business.
In a family business, most family members in it may be willing to take lower salaries, at least in the beginning, to help their business as much as possible. Family members might even be willing to help the business with their own money and finances to help it grow and to face any challenges or problems that may arise.
• Long-Term Vision:
Unlike non-family businesses, family businesses have a long-term outlook for their overall success and achievement of objectives.
They don’t have to set and achieve goals by quarter, or even by year. They have visions that extend to a few years, and maybe even a decade.
This long-term vision and patience can be very beneficial for a business, as it leads to good management, strategy, and decision-making.
On the other hand, we can’t deny the fact that just as family businesses have advantages, they have disadvantages as well; such as:
• Family Conflicts:
What family is completely conflict-free?
Probably none. And when these conflicts rise in a family business, it is even worse.
Conflicts in a family business are stronger and much more dangerous than in any other type of business, due to the history and relationships shared amongst its members.
These conflicts usually arise from bitter quarrels and fights among family members that remain unsolved, in addition to the weak communication between them. All of this might end very badly for a family business, and it can actually lead to the downfall of the business.
• Too Much Flexibility and Lack of Discipline:
There is too much trust between members in a family business; too much to the extent that it may lead to overlooking rules and internal hierarchies, as well as external trade and corporate laws, all of which tend to be taken less seriously in a family business.
Some family businesses refuse the idea of having non-family members in high-level positions. This insistence of only having family members in high and important positions may lead to assigning someone who doesn’t have the skills and expertise required for carrying out a certain job, just because they are from the family.
• Lack of Succession Plans:
Many family businesses don’t have succession plans in place, and this is usually due to either the current leader of the business is unwilling to accept that they will have to step down one day, or the inherent trust in a family business which leads to its members preferring to discuss such an issue only should the need arise.
Lack of succession plans may lead to many problems; such as: conflicts, poor management and leadership, and legal and financial troubles.
In the end, the decision to start, or run, a family business is not an easy one.
Family members willing to start their own business together should have complete and utter trust in each other, as well as a clear plan for what exactly they hope to achieve.
Family businesses, when managed correctly, can become some of the most successful enterprises worldwide. Examples of that include: Nike, Samsung, Volkswagen, Oracle, Walmart, and Novartis, to name a few.
Written by Yasmine Mokhtar