Having a family besides you, is always advantageous. Most people think that a family owned business just gives befits to family persons. However, a successfully running family business can be a win-win, for both the local or global economy.
If you are now going to run a family owned business, you must be aware that it is not all about rainbows and sunshine. You may have the own set of unique advantages but may encounter the pressure of continuing the succeed and thrive, which is not going to be an easy task.
The truth is that family owned businesses have their benefits and challenges. This article shares both advantages and disadvantages of a family business that you should know before attempting.
Pros and cons of running a family business
If you are about to take over a family owned business, you are likely to benefit from a range of benefits that people often start from scratch do not get.
Advantages of the family business
- Stability: Typically, in the family business, a person leads the company, and as a result, there usually is persistence in leadership, which appears in overall stability within the organization. Leaders always are in the top position until uncertainty results in a change.
- Common values: If you and the previous business owners share the same ethos and beliefs, than it gives you an extra sense and pride in how things need to be done.
- Hard work: One of the most significant family business advantages is that every member works hard to achieve their desired goal. Since the family’s needs are at stake, the person involved in business work hard to ensure success and achievements.
- Flexibility: Another advantage of a family business is you will not hear that “this is not in my job description”. Every member stays ready to wear another hat of work to ensure the gold achievements.
- Loyalty: Being in a family business leads to strong personal bonds. All the family members are likely to stick together in challenging times and show the enthusiasm and determination needed for business success.
- Long-term promise: Where generally an enterprise thinks to hit the quarterly goals, a family business thinks about years and decades. This long-term perspective helps them to make long-term strategies and help in taking decisions. Also, a family business includes fewer politics which eventually helps in doing the job easier.
Cons of owning a family business
Lace of interest in business and interest in pursuing something apart from the family business can lead to distraction. In the public sector, where firing less interesting candidates is easy; eliminating a family member from business is challenging.
- Lack of interest and experience: Most family businesses inherit their business to someone who does not have relevant experience. Which can lead to a negative effect on the company and to a stressful working environment.
- Family conflict: Conflict is the term with no business is apart. The kind of hatred that comes with familiarity leads to the long bitter fights and quarrels that impact the business. And where family members get involved, conflict becomes more critical and challenging to solve. For example, in 2005, a famous Indian dispute between Reliance Industries founder Dhirubhai Ambani’s sons, Mukesh Ambani and Anil Ambani which has divided India’s largest petrochemical manufacturer.
- Rules may break: One of the biggest disadvantages of running a family business that the family members may break a few rules and think it is okay. Everyone has their own approach towards work and settlement, and they feel inferior if anyone asks them to stop. They might also do it knowing that you are less likely to fire them since they are family. Either way, people take advantage of the fact that they aren’t just employees but have special rights other employees don’t have.
- Success planning: Most of the family business lacks new success strategies or has an overconfident on their old running plans and now opts for the new culture. It is important in family firms that a healthy continuation plan is mostly because of close relationships and long histories.
- Nepotism: Some family business leaders do not like outsiders to step in even if they have relevant skills and experience. Over the skilled people, in a family business jobs are given to them who have a family name and lack the skills, education, or venture just because they are family members. If you are the one who is now going to involve in the family business, you may need to prove yourself on each step and have to maintain the business legacy. However, it has also been noticed that it’s tough to retain the right talent at lower levels if their performance, and their ability to succeed in the long run. You need to be fair to retain loyalty and good people to work with you.
So are you ready to run your family business? Let’s have a look at a few key considerations:
- Create a long-term vision that needs to be compelling and help achieve the purpose of the business.
- Keep the family structure plan in mind, while you are into it to build.
- Understand if the nature of any family conflict and try to resolve it within a family.
- Understand the necessity of building a successful business and how to weave with all those strands all together for ensuring your business is strong, enduring, and successful.
You can also like to read our previous article: What’s the biggest challenge for most businesses when going online?
