There are a lot of successful family-owned businesses around the world right now all of them started at a point where mom and dad had nothing but an idea and basic resources. Whether it is retail or some digital service provider, family businesses are seen in every sector where the members of the company are mostly familiar or family patrons only. Walmart is one of the finest examples of a successful family business which started back in 1962 with two brothers namely, Sam and James. Similarly, there are Dell Technologies, Nike, and many other top brands that started within the family only.
The meteoric rise of startup companies and homegrown businesses is proof that family businesses are still growing from scratch intending to reach the top someday. Let’s find out some of the Pros and Cons of owning a family business.
PROs
Commitment and Trust
Family can help to create a cohesive team and family members tend to have more trust for each other which fosters a strong connection. They are more committed to business as they want to pass the legacy to the younger generation.
Values and Vision
Family members usually share the same values and vision which instills more unity. It makes more room for rapid decision-making without any obstruction in common mission. So, there is no need for multi-layered bureaucracy.
Flexibility in Management
Family-owned businesses also have goals but the immense pressure of profit goals is not there. They are more likely to invest the profit back into the business to create long-term growth and success for the company.
Patient Investors
Investors in this case are mostly patient enough to witness growth without poking for profit, earnings, and repayment. They focus on long-term gains than short-term ones which offer room for investment.
Loyal Customers
Family businesses are more trustworthy local businesses that are supported by all. As a result, these businesses get more loyal customers who want to keep in touch with long-term benefits.
CONs
Family Conflict
Family is built with emotions which can create conflicts in decision-making and business operations. These conflicts can lead to overall disruption in the harmony of business operations. Ambiguity in position and job roles can lead to more misunderstanding.
Work-Life Balance
Maintaining a healthy work-life balance gets even tougher when there are no defined boundaries between personal and professional life. As a result, family business can also lead to stress and burnout.
Lack of Professionalism
A professional management system is required to handle every business with efficiency but in a family business, family members could be in management which is unprofessional. Even if a professional is assigned to the work, family members can disagree with an outsider.
Financial Dependence
When you depend on family members for investment of capital, it is going to bring financial strain in the coming days. Financial management in the family business can turn chaotic with the aspects of debt financing, SBA loans, bank loans, equity financing, and many others.
Planning for Succession
Opting for the next leader is a significant decision in business and when it comes to family business; it turns into an aspect of conflict. Therefore succession planning and distribution ownership of the company gets daunting when all the board of directors is from the family only.
Concluding Thoughts
After evaluating the pros and cons of family-owned businesses, it can be safely said that family businesses face unique challenges and they also have a unique set of advantages. With the right communication, strategic planning, and professionalism; a successful family business can be established.
