Family business benefits not only the families involved but also the local and global economy. However, many find it difficult to survive. About a third of the 100,000 family business that pass on to the next generation each year eventually fail, while many small business owners struggle to ensure financial independence from their businesses in retirement.
There are advantages and disadvantages to running any business, from small businesses to large publicly traded companies. However, family business have their unique advantages and challenges. Here we discuss the pros and cons of running a family business and tips on how to capitalize on the positives and overcome the negatives.
What are the advantages (pros) of a family-run business?
Greater motivation to work hard
One of the potential benefits of running a family business is that your family members can work more than a regular employee and even more than other jobs. Since they are interested in the success of the company and want to become equal partners in the company, their extra efforts can help ensure the success of the company.
Some comfort to working together
Starting a new job is often awkward and even frustrating as you learn to adapt to other work styles and find the best ways to work together. With family, there is a kind of shorthand where each family member knows the other’s quirks, traits, strengths, and styles. It can help you get started, and it can help you avoid encountering otherwise unknown character errors.
For a better mood
Starting a business is extremely stressful, which is why experts recommend that only very confident entrepreneurs start a new business. With family members around, the workplace atmosphere could be more relaxed due to the comfort level between family members. They are also likely to be more empathetic and supportive of your joint venture.
A family business is less likely to have political minefields and office politics. Because you share values and history, it can make difficult day-to-day decisions about business direction and direction easier.
Family members are the stakeholders
Family members who are key partners in the success of the business have contributed more than traditional employees or even family members who become stakeholders as traditional partners because there is a bond between the two of you that is more than just business. This company brings you together with a common goal and a willingness to make sacrifices for your shared success.
Expand your network
When you partner with a family member in business, you get more than just their experience and help. Their presence allows you to expand your network in the community by including their friends and colleagues, all of whom may become clients or customers because of their relationship with your family member.
Shorter learning curve
If you’ve been in business for a while, your family members will have a basic understanding of what you sell, manage or produce. They may even have the same genetic interest in your business, and joining them can play to their strengths. Since you don’t have to spend as much time getting them up to speed, you can save time and money on attracting talent.
What are the disadvantages (Cons) of Starting a Business with a Family?
Family can get in the way
Let’s face it: family squabbles can distract you from running your business. Old feuds, long-standing grudges, and unresolved conflicts can make it difficult to focus on customers, improve products and services, and grow your business in general.
Work conflicts can follow you home
Work conflicts can easily spill over into your personal life and cause serious disputes between family members that can take years to resolve. Some conflicts develop to the point of damaging the business, causing it to break up, or even triggering lawsuits between family members.
They can break the rules
One of the risks of hiring a family member or partner is that they can break the rules – when a regular employee or official partner does not. Whether they do it subconsciously or simply take advantage of the fact that they are family, the sensitive early days of a new business can be dangerous to endure.
These can create strong feelings
If you have another partner or employee along with your family member, things can quickly escalate to the point where others hate your family member for taking advantage of the relationship with you. It is important not to give the impression that your family member has priority over other employees or associates just because they are related to you.
Inspiration can fade
Running a business was never meant to be comfortable. When things become too comfortable and safe, it can stifle the desire to produce excellence, increase professionalism and embrace new ideas.
They don’t have the skills to meet your needs
You may feel pressured to hire a family member over a traditional employee – even if they don’t have the right skills – they don’t have skills to meet your needs. Company In contrast to the cost-saving benefits of hiring a family member, an employee who does not have the resources to do the job costs the company both time and money.
A negative reaction can explode
Having to criticize or even simply correct the behavior of a family member can cause huge conflict in the workplace. Negative feedback can blow you in the face. Since you are not only a colleague but also a relative, feedback can be taken very personally. This can cause waves of negativity that can stall or even collapse the business.
Family business and enterprises are a delicate balance of risks and rewards. If you are planning to start a business with family members, be it your spouse, parents, siblings, or children, think about this before you take the plunge. You can’t just assume that a family business is a sure thing, but every family is different, so there is still potential for success. As in any family, there are problems that you may not be able to overcome. Sure, explore the landscape both mentally and physically to better understand what to expect.