advantages and disadvantages of family run business essay

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The Advantages and Disadvantages of a Family Business

Family-owned companies are good not only for the families involved, but also for both the local and global economies. However, many find it hard to survive. Around a third of the 100,000 family businesses that are passed to the next generation each year subsequently fail, while many small business owners struggle to ensure that they are financially independent from their businesses when they retire.

There are advantages and disadvantages to running any business, from a small business to a larger, publicly traded company. However, family firms come with their own unique advantages and challenges. Here we delve into the pros and cons of running a family business, along with tips to capitalise on the positives, and overcome the negatives.

What are the advantages of a family-run business?

There are many advantages to running a family business, such as:

The leadership of a family business is normally determined by the position of each individual in the family. As a result, there is generally longevity in leadership, which ensures overall stability within a family-run business. In many family-owned companies, the business leader will stay in the position for many years, with life events - such as illness, retirement or death - being the trigger for change at the top.

Family firms tend to have a greater sense of commitment and accountability at their heart than non-family firms, as it is not just the needs of the business at stake, but the needs of the family too. This desire for both the family and business to stay strong fosters additional benefits, including a greater understanding of the industry, the organisation and the job; stronger customer relationships; and more effective sales and marketing.

One of the oldest surviving family businesses in the world is Hoshi Ryokan : a Japanese inn-style hotel which was founded in 718 and which has been in the same family for 46 generations. This longevity has led to an incredible understanding of the business and its history, which anyone outside of or relatively new to the business would simply be unable to replicate.

Elsewhere, the Ford Motor Company managed to stay afloat during incredibly tough economic times, when other large businesses like Chrysler and GM were desperate for bailouts. It is likely that there are several reasons for their success, but with the Ford family’s name, reputation and financial standing on the line, it is likely that this encouraged their fighting spirit.

Flexibility

Working in a family-run firm requires a lot of flexibility. While non-family businesses tend to have very clearly delineated responsibilities for every role, family members will sometimes be required to wear several different hats, taking on tasks outside of their formal remit where needed.

In a now-famous quote, Estée Lauder, who formed the famous cosmetic firm with her husband in 1948, once said of her company’s success, “I have never worked a day in my life without selling. If I believe in something I sell it, and I sell it hard”. The only woman on Time magazine’s list of the century’s business geniuses in 1998, Lauder was involved in every element of her business: preparing pots of face cream, giving free product demonstrations, designing product packaging, training saleswomen and more.

Long-term outlook

Non-family firms draw up their goals for the next quarter. Family firms, however, think years - or even decades - ahead. A longer-term perspective is a good way to foster a culture of clear strategy and decision-making throughout the business.

Second-generation CEO of German multi-billion dollar retailer, Otto Group, has used this long-term outlook for serious success. He took over the business - founded by his father in 1949 - in 1981, and almost immediately began to investigate the possibilities that computer technology could offer. As a result, the brand moved into ecommerce in 1995, becoming profitable in its online sales activities by 1998. The company has never been publicly traded, and still remains a family affair.

Decreased cost

Economic downturns and other challenging times can be a struggle for many businesses, where the board of directors needs to work out how to keep the business afloat while still paying staff. In family firms, however, it will often be the case that family members are willing to contribute financially to keeping the business afloat during times like these. It may be that this involves taking a temporary pay cut, contributing some of their own finances, or pausing the payment of dividends while the company gets back on its feet. For the family behind the business, long-term business success is crucial to their financial survival, which gives more flexibility where finances are concerned.

What are the disadvantages of family-run businesses?

While it is clear that there are plenty of benefits to family-owned companies, they also have their downsides:

A lack of family interest

In a family business, there can be a great deal of pressure on future generations to keep the business going, even if they have no real interest in doing so. This can result in a workforce - or worse, a management - consisting of family members who are apathetic, unenthusiastic and disengaged. In any other business, it is likely that such an approach would see employees having their contracts terminated. In a family business, this is more of a challenge.

Conflict between family members

The dynamic between different family members, family (and business) history and a blurred boundary between family life and work life can all cause conflict within any family-run business. And the family connections can often make such issues difficult to resolve. When Dhirubhai Ambani, founder of Indian petrochemical manufacturing company Reliance Industries, died in 2002 , he left no will. His older son, Mukesh, was made chairman and managing director, while younger son Anil became vice-chairman. The feud between the two brothers became public and, in 2005, their mother demerged the company, leaving Mukesh in charge of the petrochemical business, and Anil responsible for Reliance Energy, Reliance Communications and Reliance Capital.

A lack of structure

Family businesses rely firmly on trust - but trust alone may not be the best way. It is still vital to take rules seriously - both internal rules, and external corporate law.

In 2008, Samsung Group chairman Lee Kun-Hee was forced to hand in his resignation after being convicted of tax evasion, in addition to being investigated for selling stock to his son at unfairly low prices - demonstrating how good structure and management can make an enormous difference.

Some family businesses can fall into the trap of promoting family members to senior management roles, even when it may be clear that the individuals within these roles do not have enough education, experience or skills to fully embrace their responsibilities. In these situations, it would be far more sensible to place more qualified non-family members in these positions - but is this possible without causing friction within the family? While it can be a challenge to balance family relationships and expectations with finding the right person for the job, a lack of competence at a senior level can have a huge impact on a company’s success, as well as on talent retention.

Succession planning

Research reveals that 62% of employees say they would be “significantly more engaged” with their role if they knew their employer had a clearly defined succession plan in place. However, many family business owners fail to create succession plans, be this whether they feel that it is not needed until further down the line, or because they refuse to admit that the time will come when someone else will need to take the reins. The reality is that illness, death or even scandal can require a family business to appoint a successor in a very short space of time. Without the right plans in place, it can be very hard for a business to move forward in such an event. While family-owned companies clearly have plenty of advantages, their very nature can also make sustaining them in the long-term a challenge. The goal for any family business owner should, then, to be clear about what the strengths and weaknesses of a family business can be, in order to determine how to ensure future success.

Key Considerations:

• Build a long-term vision for the family business that is compelling and gives purpose to why you are doing this.
• Consider the type of family business structure you want to build and test out whether it can last three generations.
• Understand what family conflicts are brewing that need to be resolved with some professional mediation and coaching. In a future article, I’ll introduce you to the DNA Model. I’ll show you how to ensure you have all the strands necessary to develop a successful business and how to weave those strands together to ensure your business is strong, enduring, and successful.

These three considerations are an extract from a book by global family business advisor, Reg Athwal - Unleash Your Family Business DNA: considerations for family businesses that will help to ensure their survival. But what do they actually mean? Inspired by Reg, here are our thoughts.

How can I build a long-term vision for a family business?

Some businesses may be fortunate enough to have the next generation raring to go and with the skills and attitude needed to take the business forward. Others may have family members who are keen but who they do not feel are right to take on the business going forward, while others may have a next generation who simply has no desire to continue in their family’s footsteps. The key to developing the next generation of talent is to start early. Each year, approximately 100,000 family businesses are handed down to the next generation - and around a third of these businesses will subsequently fail. Part of the problem is a failure to plan early: by deciding on your successor early and briefing them on their hypothetical role, you will ensure that they are ready for the switch and know what to do, whether they take the reins next week or several years down the line. It could be that you create a “family council” - separate from business leadership meetings - where you discuss the business, its objectives, its issues and more with the entire family, so that everyone is aware of its current and likely future position. It could be that children are brought into the business in their secondary school years to shadow existing team members. Not only will this ensure that the whole family has a better understanding of how the business works, it will also help you to establish which of the next generation will be a good fit for the company. Whatever you do, it is also important to document your succession plan, your company goals and more so that when the time comes, the takeover is as smooth as it can possibly be.

Which structure is right for my family-run business?

A successful family business will need to be built upon an appropriate structure - and this structure may shift as it moves from generation to generation, or as the market evolves. Generally, there are five different business structures that a family business will choose from:

• Owner-operator. A business with a single owner, who runs the day-to-day operations of that business. In family businesses, the challenge here can be in deciding fairly who will take over this role when the current owner-operator retires. 
• Partnership . An approach where two or more partners have ownership of the business, and these owners are the people who benefit from any profits. While it works well for some family businesses, determining who will succeed current partners can be problematic.
• Distributed . A popular model for many family businesses, the distributed model avoids the tasks of having to choose new partners as successors. Instead, business ownership is passed down to the family’s descendants - whether or not they actually work within the business. However, the family may define a compensation policy that ensures that those who do contribute to the success of the business are better rewarded. However, the very existence of such a compensation policy can cause arguments between those who are involved in the business, and those who aren’t.
• Nested. “Nested” refers to the fact that in this type of business model, certain assets are owned by individual branches of the family, with other assets owned by the family as a whole. The core business is run as a profit-making enterprise, with dividends paid to the family branches so they can create their own profit-making ventures. While it can be a good approach to reduce tensions between family members, some may find that it can be a challenge to balance the needs of the core business with the dividends being paid to the smaller operations.
• Public. This model may mean that some or all of the shares in the business are traded publicly. However, it may also mean that the business simply behaves like a public company, with business owners playing a minimal role, and professional managers brought in to run the business. This approach can work well when the business is looking for a large amount of external funding, or when its owners simply don’t have the time, resources or inclination to be involved on a day-to-day basis. However, it may not work so well if the owners want to maintain significant control over how the business is run. 
• Want to build a family legacy that will last for generations? Buy Reg Athwal’s book for some fantastic advice!

How can I best resolve conflicts within a family-run small business?

Conflict is likely in any business setting. However, in family businesses - where personal histories, family relationships and potential quarrels between family and non-family staff can be involved - conflict can often be far more difficult to manage, and far more detrimental. Without handling disputes and conflict within a family business carefully, they have the potential to become far more serious problems, impacting on both the business itself and family relationships. While the ideal solution would be for these conflicts simply not to occur, this is unrealistic - which is why it makes sense to have formal processes in place to deal with disagreements as and when they arise. 

• Regular communication. By fostering an environment where all employees are encouraged to communicate about issues they face, speedy resolution is more possible. In some businesses, however, it may be that certain team members would prefer a more formal way of communicating their concerns, which brings us on to…
• Family councils. Family council meetings offer a formally structured means of expressing concerns, issues or anything else that family members want to discuss with the wider business. It may be that these councils include management, it may be that they are designed as a space where people can discuss issues without management’s involvement: different solutions will work for different businesses. The important thing is to ensure that your family members within the business know that they can safely air any concerns, and that they will be listened to with no judgment.
• Separating work life and family life. In a family business, keeping work at the workplace can be a challenge. However, keeping work life and home life as separate as possible can help to reduce the likelihood of serious family conflict. Some businesses choose to make certain times of the day “no-business zones”, or set ground rules that say that business issues can only be discussed in the workplace and not at home.
• External mediation. If a conflict has reached the stage where it seems unresolvable, then bringing in a trained mediator can make a big difference. An external mediator will help a family to discuss issues without emotion clouding judgments, focusing on the key issues that need to be addressed for the conflict to be resolved. 

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Pros and Cons of Starting a Business With Family

Is a family-owned business right for you?

Sakshi Udavant covers small business finance, entrepreneurship, and startup topics for The Balance. For over a decade, she has been a freelance journalist and marketing writer specializing in covering business, finance, technology. Her work has also been featured in scores of publications and media outlets including Business Insider, Chicago Tribune, The Independent, and Digital Privacy News.

Before Starting a Small Business With Family

Pros explained, cons explained, frequently asked questions (faqs).

Morsa Images / Getty Images

Starting a new business with your family may sound like an exciting opportunity, and it could be a lucrative venture for you, your partner, your parents, your child, or another family member you partner with. But is it the best option for starting your own business?

Combining your personal and professional lives can be both rewarding and problematic depending on the type of business you own, the members you work with, and how you divide responsibilities and revenue.

Here are the pros and cons you need to consider before starting a business with your family .

Key Takeaways

• Working with your family can create a supportive environment because you likely already trust the people with whom you work. 
• A family business can make it difficult to separate work and family life.
• The whole family depending on a single revenue stream can be dangerous in times of crisis.
• Take your individual situation into account before starting a family business.

In 2017, there were a total of 31.7 million small businesses in the U.S., of which 31% were family-owned and operated, according to the Small Business Administration. And the idea of starting a family business appeals to many entrepreneurs for a wide range of reasons. It’s likely you deeply know and trust the people you’ll be working with, the revenue stays in-house, and there’s a possibility of the business being handed down to future generations. It is a great chance to create a family legacy, but there’s a lot that goes into starting a family business.

There are various challenges you can face as a small family business, from household conflicts spilling into the workplace to being too lenient because it’s family. To break this down in detail, we interviewed various online and brick-and-mortar family businesses in the U.S. to understand the pros and cons of running a business with the people in your family.

Pros and Cons of Starting a Business With Your Family

You trust your business partners

You understand each other’s strengths and weaknesses

Spending work hours with your family by your side

The money stays in the family

You can maintain traditions

Personal conflicts can interrupt business

No personal time off

Fewer rules can lead to too much leniency

Potential lack of fresh ideas

One revenue stream

You Trust Your Business Partners

There's a pre-established trust and dependency when you work with the people you live with, so you don't have to worry about trade secrets leaking, nor may you feel the need to micromanage. For some businesses, this is a must.

“Because we sell jewelry and gemstones in the tens of thousands of dollars, trust is key,” Jeff Moriarty, who operates Indiana-based family business Moriarty's Gem Art, told The Balance in an email interview.

Trusting your family members to handle and know business operations and finances also creates a safe space to openly discuss challenges and navigate difficult decisions.

Trust can also push you to take healthy risks because you know your family has your back. It creates a feeling of support and togetherness, which can help you survive the tough times. “Building something together gives you the chance to look back and say, ‘Against the odds, we did that together,’ ” Kristin Meyer, owner of Southern Crafted Shutters in South Carolina, told The Balance via email.

You Understand Each Other’s Strengths and Weaknesses

The best part about working with your family may be that you likely understand each other and can compensate for each other’s weaknesses.

For example, if one member is better at math and the other excels at advertising, it’s easier to divide the responsibilities accordingly and make up for what the other lacks, instead of hiring someone new for every role. This is particularly helpful in the early stages when the business is new and there’s little scope to spend a lot of money on hiring, training, and retaining external workers. It can also help navigate difficult situations, such as when customers complain; a family member with good people skills can handle in-person issues, while someone with good computer skills can solve online queries.

“Operating a business alongside the people you know best, and who know you best is a huge advantage,” George Civiletto told The Balance in an email interview. Civiletto works for his legacy family business Tuscany Market & Deli, which has been passed down from generation to generation since 1918. “It allows you to work better as a team and accommodate each other’s strengths and weaknesses to achieve success.”

Spending Work Hours With Your Family by Your Side

Owning and operating a small business typically takes a lot of time and energy, so emerging entrepreneurs often spend several hours at work, away from their families. This isn’t so bad when it’s a family-owned and operated business, according to Joe Darragh, co-founder of  family-based online company Pillar Digital Marketing Agency. “Your loved ones are by your side the entire time,” he said in an email to The Balance.

Building and growing a business together with your family takes a lot of work. This experience may bring you closer in and out of the business.

The Money Stays in the Family

One of the biggest reasons people enter family businesses is to keep the money within the family. When you’re working with the people in your own household, the revenue stays in the house, and all the members benefit when the business flourishes. Salaries can also be flexible as the money comes and goes out of the same house. This flexibility can help small businesses navigate the rapidly changing economy where the income may never be fixed.

You Can Maintain Traditions

Whether your family has a tradition of making a certain meal every year to celebrate the holidays or loves to visit a certain region of the country every summer, you can bring those traditions into your family-owned business.

For Heather and Michael Heard, owners of Ray’s Millpond Café in Georgia, they’re able to keep alive traditions that embody their Southern culture. The Heards told The Balance in an email that they’ve been able to preserve the family’s seafood traditions for over 60 years.

Another example is Buddy Foy Jr., owner of two family restaurants inspired by their family’s heritage: Chateau on The Lake in New York, and the Chateau Anna Maria in Florida. Through these restaurants, the family hopes to build a business that will be a legacy their daughters can enjoy and share, if they so choose.

Personal Conflicts Can Interrupt Business

The biggest problem that can come from working with your family is that when you have disagreements or arguments at the office, they carry home with you and vice versa, Moriarty said. Sometimes this can make it hard to be productive at work. If you’re not talking to your parents or partner at home, it can be difficult to act professionally with them at the store or office.

No Personal Time Off

Working with your family can lead to spending a lot of time together, but that isn’t always healthy. “The business can take over every waking hour,” Meyer said. “For example, we went away one weekend and while walking on the beach, we were talking business strategy!”

Meyer said that it’s just hard to actually remove yourself from the business sometimes, even when you’re not physically there. If you’re not able to set up rules around personal time, then it can be tough to feel like you get a break from your job.

Fewer Rules Could Lead to Too Much Leniency

When you’re working with your loved ones, it’s tempting to throw the rules out the window. Maybe there’s no strict schedule for when everyone needs to be in the office, so when your brother comes in at 11 a.m. every Friday, it’s easier to just let it go. If there’s no fear of being “fired,” your family members may feel less pressure to perform .

Just as with a traditional day job, you could establish job responsibilities and performance expectations for everyone in the family to follow.

Potential Lack of Fresh Ideas

Working with the same people every day could result in a lack of new ideas. Brainstorming sessions can become an echo chamber with everyone thinking along similar lines, and it may be difficult to notice blindspots as members living under the same roof can have similar perspectives. It’s important to recognize when that happens so you can bring friends into the conversation to help diversify ideas and thoughts.

One Revenue Stream

If the entire family is working on the same business, what happens if the business fails ? The whole family could go into a financial crisis. “This can compound strains on family relationships,” Darragh said. “If your spouse has a wage-earning job, that can help weather the storm.”

But even if one family member has an income separate from the family business, it’s important to have an emergency fund in case the business fails. Save money where you can so that you can still pay your bills and keep a roof over your head.

Is it a good idea to start a business with family?

Whether it’s a good idea to start a business with your family depends on several factors. It’s always important to discuss this with all the members to ensure they’re on the same page. Don’t start a business just because you want one. Consider demand for your product or service, and what could happen if the business doesn’t work out.

How do I start my own family business?

To start your own family business, decide on an idea, read up on the basics of operating a business, and divide the responsibilities between the members who choose to be involved. Figure out how you’ll fund the business, whether through savings or a loan, and it’s important to set concrete goals. Set aside time to get the important tasks done and promote your new family business when it’s ready.

U.S. Small Business Administration, Office of Advocacy. “ Frequently Asked Questions .”

Facebook. “ Tuscany Fresh Meats & Deli on May 5, 2018 .”

U.S. Small Business Administration. “ 10 Steps To Start Your Business .”

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IELTS Essay # the best way to run a business is within the family

Ielts writing task # essay.

Some people think that the best way to run a business is within the family.  What are the advantages and disadvantages of a family run business?

SAMPLE ANSWER-

In many parts of the world, businesses are owned and run by families. Its usual contributors include close relatives who handle the resources and finances of an organization. There are some benefits associated with a family business, but there are also some drawbacks associated with undertaking a business venture with the family.   

With the persistent commitment and involvement of the family members, firms run by families have a greater level of stability and loyalty attached to it. Even during bad times family ties can keep the firm running. The commitment of the family members results in more dedication and flexibility. In other words, members would work together to achieve a common goal irrespective of their qualifications. In fact, most successful business ventures like Walton’s and Ambani’s are also run within the families.

On the contrary, one of the most compelling shortcomings of a family business can be conflicts among the partners than can have an unfavorable effect on the business. For instance, the rivalry between husband and wife or siblings can result into the partition of the venture. In addition, the lack of interests among people to join family entrepreneurship leads to apathetic employees. And sometimes the successors of the business are not capable enough to run it due to which the organization suffers. 

To conclude, there are both supporting and opposing arguments for a family business. Many experts believe that building an organization with family helps keep the family together. With communication and understanding, a dispute in family entrepreneurship can be avoided. 

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Working in a Family Business

Understanding the pros and cons.

By the Mind Tools Content Team

Working in a family business can be a pleasent and rewarding experience, for both family members and "outsiders" alike. But, there are also many pitfalls.

Perhaps you're an "outsider" and feel like you need to pick up the slack of a family member who's not pulling their weight. In most companies, you could simply complain to your boss. After all, every team member should work equally hard, right?

The problem is that you don't work for a "normal" company. You work for a family business, and your colleague is closely related to the boss. That makes things a bit more complicated.

So, what do you do? How do you handle difficult situations involving family members in a family-run company?

In this article, we review the pros and cons of working in a family business – both for family members and for outsiders – and we discuss some strategies for creating and managing successful working relationships in a family-business environment.

Issues for Family Members

If you work in your family's business, you probably already know that it can be a complex environment.

Here's an example: imagine that your mom owns the company you work for. You're heading the advertising department and have a unique, innovative idea for the next marketing campaign.

When you pitch the idea to your mom, however, she's less than enthusiastic. And instead of bringing up impersonal, practical reasons for not going along with your idea, she brings up mistakes you made years ago, before you even started working for the company.

In a family company, there's often no such thing as a "fresh start."

Like everything in life, working with your family has its pros and cons:

Pros of Working for Your Family

• You're collaborating with people you trust and care about. This can be a very nurturing environment, and it can give all family members more self-confidence.
• The work environment may be more relaxed. For example, it may not be an issue if you occasionally arrive late or leave early, which it may be in a traditional corporate culture where flexibility isn't built into your contract.
• Family members usually understand that they're all in this together, and are working toward a common goal. They may be much more willing to make financial sacrifices for the company, if things get tough.

Cons of Working for Your Family

• Family members are often promoted even if they're not an ideal fit for a new position. This can lead to business problems, as well as angry and resentful non-family staff, who may have been denied the promotion.
• Personal issues are easily carried into the work environment, and work issues may be carried back into home life. This may lead to family problems that impact the company and the other workers.
• Because family members often have the same background and upbringing, the danger for groupthink and resistance to change is very high, especially if an older family member is running the company.
• Family members may find it hard to take tough business decisions that will have a negative impact on another family member, or give them negative feedback about their performance when appropriate.

Issues for Non-Family Members

If you work for a family business, and you're an "outsider" – not a member of the family circle – then your position can be challenging.

For instance, you've been at a family-run company for almost five years. And yet, you've never had any kind of performance review. You're not sure if the work you're doing could be improved, or even if the owner has an opinion on the changes you've implemented in the company. You'd like more responsibilities, but it doesn't seem like there's any kind of procedure in place for reviews or promotions.

Should you proactively ask for a review, or will this be considered too meddlesome since you're "outside the family?"

As an outsider looking in, it can be hard to know what to do. Just like for the family members, there are several pros and cons here:

Pros of Working in a Family Business

• A family-run company may have a more relaxed environment, as we said above, and this can be pleasant for non-family members too. Some companies may treat all of their staff like family, which can create a wonderful personal work environment.
• It can be easier to make big decisions in a family-run company. Instead of having to wade through multiple layers of bureaucracy, which are common in larger organizations, family-run businesses are often more flexible. If you need approval for a project, you're more likely to get a quick decision.
• When a family runs a company, the desire to keep things profitable and stable for future generations is usually very strong. This is good news if you're looking for a safe, secure job.

Cons of Working in a Family Business

• It's easy to feel excluded, especially if family members discuss business or hold meetings at home, or outside of work hours.
• Earning a promotion may be difficult, especially if the choice is between you and someone from the family. Very often, family loyalty is likely to impact the decision.
• If you attempt to make changes that in your view will improve the way the company works, you may face resistance by family members. They may see your actions as harmful, and they may do whatever they can to preserve their traditions, and keep everything the same.

Strategies for Success in a Family Business

Whether you're an outsider, or part of the "ruling family," you can use several strategies to succeed in this environment.

Family Members

• Establish boundaries – Create a "best practices contract," and make sure that every family member working in the company has a copy. For instance, it's easy to take work home, and talk about business on nights and weekends. This connection between your work life and home life can cause stress, and you may feel as though you never have any time off from the business. Boundaries are crucial – make sure work stays at work, and keep home time separate. When it comes to making tough decisions or issuing reprimands against another family member, managers need to remind themselves and their relative that they're acting for the long-term good of the business because they're at work, and what they're asking for in no way reflects what they think of the other person as a cousin, sister or daughter.
• Define roles – Clearly define everyone's roles, and how they fit within the company hierarchy. For example, if you assign your aunt a project, she may push it aside because (a) you're her niece, and (b) you're much younger than she is. This is not only frustrating, but it can also be very bad for the company's productivity and success. Identifying lines of authority can help to prevent this type of conflict.
• Reward fairly – Problems often arise when there's an unfair distribution of rewards between family and non-family staff. For instance, family members may receive higher bonuses than non-family workers. Reward all team members based on competence and achievements, not personal relationships.
• Promote fairly – Ensure that non-family staff have the same chances for advancement as your family members. If the rest of your team believes they can't move up in your company, they're probably going to leave. You don't want to lose that talent and knowledge.

Non-Family Members

• Don't take sides – If family members are having a disagreement, you might be expected to support one side or the other. Aim to stay neutral. Listen to their problems, but don't get involved, or try to solve anything between them – there's likely more going on than you can see. If things get really difficult, you may consider booking some time out of the office.
• Understand your position – If you dream of one day becoming the CEO, then you should probably start looking for a job somewhere else. The chances of a non-family member heading the company are probably small, at best. Examine your professional goals and your work environment. If the two are aligned, then you'll likely feel happier, and have less conflict in your career.

Working in a family business has its advantages and disadvantages. Whether you're an outsider, or one of the family members, succeeding in a family-run company can be challenging.

If you're part of the family, keep emotional conflicts out of the office. Treat family and non-family staff equally, and make sure rewards are based on performance, not family relationships.

If you're an outsider, don't take sides in family battles. Stay neutral, and take a day off if things really get bad. Recognize your role in the company – and if you're looking for major advancement, and the family doesn't often promote non-family members, it might be time to reconsider your options.

To learn more about working in a family business, our Book Insight on 'Family Wars' is an informative resource.

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Pros & Cons of Family Business

• Small Business
• Business Planning & Strategy
• Pros & Cons of Businesses
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The Advantages of Having a Family Council in a Family Owned Business

Six life cycles of a business partnership, what is the importance of nepotism policies in the workforce.

• The Importance of Soft Skills in the Workplace
• How to Start a Small Family Owned Business

A family business is a commercial venture in which family members are involved. A family business can include many possible combinations, such as parents and children, husbands and wives, multiple generations, and extended families taking the roles of board members, stockholders, advisers and employees. There are family business benefits associated with working with your loved ones. But there may also be some challenges to working with family in any kind of business venture.

Expectations of a Family Business

Family-owned businesses are ideal in theory because working with family members are meant to form a grounded and loyal foundation for the company. You are supposed to already know these people - these are your family business partners . Make sure you speak early and often about everyone's roles, investments and expectations for the company. It's even better if you draw out partnership contracts that lay out in simple legal terms the nature of the business relationship.

Familiarity with Your Partners

Another trait found in family-owned businesses is that the family members will often exhibit more dedication and commitment to the shared common goals . Having a certain level of intimacy among the owners of a business can help bring about familiarity with the company and having family members around provides a built-in support system that should ensure teamwork and solidarity. Other benefits of a family business include long-term stability, trust, loyalty and shared values. Families also tend to be more willing to make sacrifices for the sake of the business.

Flexibility with Life Issues

Family businesses also tend to be more lenient and forgiving when it comes to life issues, and being flexible for life vs. work balance. In a family business, there may be more leeway to work a flexible or part-time schedule, or to choose your own hours, so you can tend to your children, parents or other family members in need. Conversely, this relaxed approach to work may mean that there is a similar casualness toward work schedules, work-related decisions and judgments, and even major errors at work. These issues will have to be dealt with as they arise.

Ability to Decide Quickly

A family-owned business also has the ability to make swift decisions, especially when deadlines are tight and crucial actions must be taken. The family business benefits from the closeness of the partners, and if all members are in close communications, these decisions can be made easily and for the good of the entire organization.

Hiring and Promotions Within

In a family business, some of your family members may not be fully quipped to handle the specific job assigned to them. This can cause some consternation among members. Business owners may sometimes automatically promote family members if there are others in the company more qualified for the position. Just because the person is a family member does not mean he will be best suited to a given job, and a company that hires only relatives may end up having some bad apples. Sometimes skill and work experience may be neglected. Business owners also cannot expect all family members to love the business.

Family Relationships and Business Succession

Family businesses can bring up a lot of family company conflicts. They can be a source of difficulty when it comes to issues on succession, sibling relationships, and identity development. Succession is one of the most difficult challenges that family businesses face and can become a challenge when the older generation does not permit the younger generation the needed room to learn, develop and grow.

On the other hand, sometimes no one in a subsequent generation even wants to assume the leadership position in his parent's business. Oftentimes, relationships between parents and children, or among siblings, tend to deteriorate due to lack of communication within the family. This dysfunctional behavior can result in judgments, criticism and lack of support.

• The Balance SMB - 14 Pros and Cons for Starting a Business With Family Members
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• 2 How to Manage a Family Business
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What You Can Learn from Family Business

• Nicolas Kachaner,
• George Stalk, Jr.,
• Alain Bloch

Focus on resilience, not short-term performance.

Reprint: R1211H

Though the term “family business” may call to mind visions of local mom-and-pop firms, family-controlled companies play a huge role on the global stage. Not only do they include sprawling corporations like Walmart and Tata Group, but they account for more than 30% of all companies with sales in excess of $1 billion. And over the long term, their financial performance exceeds that of traditional public companies, according to a new study by BCG and École Polytechnique.

Family-controlled companies surpass their peers because they focus on resilience, not short-term results. During economic booms, this approach leads them to forgo some opportunities (and hence do slightly worse than their counterparts), but it puts them in a position of strength during downturns, when they shine. The researchers identified seven specific ways in which family-run businesses build their resilience:

1. They’re frugal in good times and bad.

2. They set a high bar for capital expenditures.

3. They carry little debt.

4. They acquire fewer (and smaller) companies.

5. They’re more diversified.

6. They’re more international.

7. They retain talent better than their competitors do.

Though these practices come more naturally to executives who feel an obligation to be stewards for the next generation, executives at any corporation can adopt them. Indeed, the researchers uncovered a number of nonfamily-controlled companies that mimicked the behaviors of family firms and saw very similar patterns of performance.

To many, the phrase “family business” connotes a small or midsized company with a local focus and a familiar set of problems, such as squabbles over succession. While plenty of mom-and-pop firms certainly fit that description, it doesn’t reflect the powerful role that family-controlled enterprises play in the world economy. Not only do they include sprawling corporations such as Walmart, Samsung, Tata Group, and Porsche, but they account for more than 30% of all companies with sales in excess of $1 billion, according to the Boston Consulting Group’s analysis.

• NK Nicolas Kachaner is a senior partner and managing director in the Paris office of the Boston Consulting Group.
• George Stalk, Jr. is a senior partner (retired) of the Boston Consulting Group and a BCG fellow. He is the author of Five Future Strategies You Need Right Now (Harvard Business Review Press, 2008).
• AB Alain Bloch is a professor at CNAM and HEC Paris, the academic director of HEC Entrepreneurs, and a cofounder of HEC Paris Family Business.

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The Advantages And Disadvantages Of Family Business

Shannon waller.

I recently had a fascinating conversation with family business expert Sara B. Stern where she shared the advantages and disadvantages of family business—as well as how to maximize the unique opportunities that come along with the pros and cons.

Below, I’ll summarize my favorite takeaways from our talk. To dive deeper, check out the link at the end to get Sara’s latest books!

The advantages and disadvantages of family business.

Family-owned businesses are a special breed. But there are pros and cons. On the plus side, they provide a way for the family to collaborate, connect, and unite around a shared mission. The business can become a family legacy, something to be proud of and grow for generations. When families strive, grow, and work toward something together, they unlock a deeper connection with their family that many never experience.

On the flip side, it can be a point of contention and stress if not managed properly, and it can pull families apart instead of binding them together. Knowing the advantages and disadvantages of family business helps families preserve and protect the good while mitigating the negative.

The Three-Circle Model of The Family Business System.

Many decisions can be incredibly destructive to the business and the family itself. To protect against this, Sara teaches the Three-Circle Model of The Family Business System, which was developed at Harvard Business School by Renato Tagiuri and John Davis in 1978.

In family-owned businesses, it’s common for the lines to be blurred between the circles of ownership, family, and business.

For example, spouses with big hearts and good intentions may give destructive business advice about employing family members, pay, and ownership. Spouse involvement has pros and cons because, while they may be thinking about what’s fair from a family point of view, it’s not that simple when considering what’s good for the business.

For any business to succeed, you need the right people for the job—whether family or not—and if it’s not a good fit, something needs to change immediately. By taking a systematic, objective approach to determining who should have a say about what, you reduce the chances of strain on the family and business.

Family-owned business leadership.

It’s critical for each circle—family, business, and owner—to have its own leader, priorities, decision-making processes, and rules of engagement so they can operate individually and harmoniously with the other circles.

The family leader The family leader can be thought of as the CEO—the Chief Emotional Officer. Their role is to break ties in conflict, keep the family together, regulate business talk during family time, and ensure traditions stay intact. This is where the spouse can come in. The family circle prioritizes harmony and fairness.

The ownership leader The ownership side needs the Chief Ownership Officer, a role that can look different depending on the phase the business is in. As a business gets more complicated, there will need to be succession plans in all three circles. Ownership needs to get defined carefully by its leader, and then the priorities reflecting that definition must be upheld. As an owner and a family member, it can be tricky to navigate challenges with employees or partners who are family. Make it clear which role you’re speaking from so your family knows whether you’re making decisions as a business owner or a family member.

The business leader The business side wants a return on investment, profits, and growth. The leader may be the day-to-day operator or manager and may not be the owner. Sara believes this model is great for any entrepreneur because it shows that you can structure your business so you can own it but not necessarily have to run it.

Family-owned businesses: Start Here.

Keeping the advantages and disadvantages of family business in mind, Sara believes there are a few questions owners should ask themselves to act as guideposts along the journey:

• What is your legacy?
• What are your values?
• Where do you want to go?
• How have you made decisions, and how will you continue to do so?
• What’s your philosophy of ownership?

These answers act as success criteria and help you make future decisions much easier. They also help others when you’re not around and generally enhance the advantages of the family business.

Cultivating an owner’s mindset and philosophy.

The primary job of the owner is to maximize opportunities for the family and business while minimizing risk. Often, what appears to be an opportunity for the family isn’t good for the business and vice versa. Still, issues within each circle should stay there and be resolved by their respective leader. When this doesn’t happen, the business suffers, especially when big decisions must be made, like the succession of ownership or leadership.

By understanding the advantages and disadvantages of family business, you can avoid challenges or navigate them gracefully as a team when they come up. That way, you and your family can enjoy the freedom, fulfillment, and joy of working together on something big.

To learn more about unlocking the power of your family business, check out Sara’s latest books, Start Here: A Guide for Family Business Succession and Married to the Family Business: A Guide for Spouses of Family Business Owners .

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IELTS Task 2 Sample Answer 4 - Some people think that the best way to run a business is within the family. What are the advantages and disadvantages of a family run business?

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Task 1 (Graph) - The graph below shows the sales of children’s books, adult fiction and educational books between 2002 and 2006 in one country.

Task 1 (Graph) - The bar chart gives us the information about the life expectancy in Japan, Korea, United States and Indonesia and the table shows us the change in the life expectancy between 1953 and 2008.Summarise the information by selecting and reporting the main features and make comparisons where relevant.

The Pros and Cons to Running a Business with Your Family

So, you’ve decided to  start a business  with your family. This can be a good thing. Some of the most lauded and successful companies in the world have started as enterprises between family members. Whether it’s the plumbing company down the streets whose trucks forever say “…and sons,” to juggernauts like Warner Bros., family-run businesses have long been one of the backbones of America.

And yet sometimes, they have also been flaming  dumpster fires  that break off entire bloodlines from the rest of the family. That happens, too.

On the one hand, these are the people you know better than anyone else in the world besides yourself. You might share a house, you certainly have regular meals and holidays together, and you probably have shared some of your most important memories together under one roof. But is investing your time and money in running a business with family members a good idea?

It depends. Commonly, business experts warn first-time  entrepreneurs  not to start a business with friends or family members. But for every  entrepreneur  who took that advice and still found success, there’s a long list of successful family-owned and controlled businesses, from Volkswagen to Wal-Mart. Based on those examples, there’s certainly a case to be made that starting a business with family members can be positive enterprise.

But the downside of working elbow-to-elbow with family can be a real bummer too.  High-profile failures , aggressive acquisitions, buyouts, bitter feuds and permanently broken relationships have all resulted from conflicts in family-oriented businesses.

Deciding whether to  start a business  with family members or even friends is a complex decision that is never clear-cut, because it largely depends on your own motivations for starting a business, the personalities of the family members involved, your business acumen and management style, and even the state of the market.

Let’s take a closer look at the pros and cons of running  a business  with your family.

The Pros of Starting a Business with Family

The Cons of Starting a Business with Family

The Bottom Line

It’s obvious that  family-owned and managed businesses  are a delicate balance between risks and rewards. If you’re planning to start a business with family members, be they a spouse, parents, siblings or children, think it through before you leap. You can’t just assume that a family-owned enterprise is a sure thing, but every family is different, so the chances of success are still there. Just like any family, there are problems that you may or may not be able to overcome. To be safe, scout out the terrain both emotional and physical, so you have a better understanding of what you can expect.

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Family-run businesses : The advantages and disadvantages

• Starting a Business

Family business benefits

• Shared Values ​​- You and your family are more likely to follow the same ideas and beliefs as anything else you need to do. This will give your business an added sense of purpose and pride, as well as a competitive edge.
• Commitment – to building a long-term family business means you are likely to put in the extra hours and effort required to make it successful. Your family is more aware that you need to be more flexible about your working hours.
• Loyalty – A strong personal relationship means that you and your family are more likely to get through tough times and show the determination you need to be successful in business.
• Stability – knowing that you are creating future generations encourages the long-term mindset necessary for growth and success, but it can also lead to a devastating inability to respond to change.
• Reduced Costs – Family members are more likely to sacrifice their finances for the business. For example, they agree to a lower salary than anywhere else to help the business for a longer period of time, or they defer salaries during a cash flow crisis. You may also find that you don’t need employer liability insurance if you only hire close family members.

Disadvantages of a family business

• Lack of skills or experience -Some family businesses appoint family members to positions for which they lack the skills or training. This can negatively impact business success and create a stressful work environment.
• Family Conflict – Conflict can occur in any business, but it is important to remember that disputes in a family business can become personal as employees work with those closest to them. Bad feelings and resentment can destabilize your business and ruin your family relationships.
• Benevolence – Can you objectively promote employees and promote the best person, whether they are related or not? Business decisions are important for business, not for personal use. This can sometimes be difficult if family members are involved.
• Succession Planning – Many family business owners can find it difficult to decide who will run the business if they retire. The manager needs to objectively determine who can best implement the business and try to reduce the likelihood of future conflicts – this can be a tricky decision.

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In Many Countries It Is Common For Families To Run Their Own Business | Band 9 IELTS Essay Sample

by Manjusha Nambiar · November 20, 2018

In many countries it is common for families to own and run their own business. Some people think this is the best way to run a business while others consider this a potential source of problems.

Here is a band 9 essay on this topic. Need help with writing? Get your writing samples corrected by me.

Band 9 IELTS essay sample

Family owned businesses are quite common in some countries. While some people believe that they have higher chances of success others opine that they are more likely to run into trouble. In my opinion, family businesses have some inherent advantages. However, disagreements between family members can lead to the disintegration of such entities.

The biggest advantage that family businesses have over other businesses is that in a family owned business, people are working for themselves. This itself is a great factor that contributes to the success of a business. People tend to work harder when they work for themselves. Also when someone works for a family owned business, they have the support and encouragement of their family members. In addition, children born in business families learn the tricks of the trade from their childhood itself from their parents and grandparents. This exposure gives them a head start when they start their career and enables them to run the business more efficiently. Also working with family members for the common benefit of the whole family can be both fun and rewarding. In short, a family owned business has many advantages that a regular establishment lacks.

On the flip side, some of the advantages of a family run business can turn out to be disadvantages if the members of the family are not careful. For example, younger family members are more likely to be irresponsible and immature. If they regularly turn up late for work or take too many holidays, it can lead to disagreements. Also, when someone works under their father or sibling, they are more likely to show a lack of seriousness. Unfortunately, this will hurt the prospect of the entire business. In addition, disputes between family members and ego clashes will run a family owned business into trouble.

To conclude, after analysing both sides of the argument it is not hard to see that family owned businesses have several advantages over other types of establishments. However, families that run their own business must ensure that disagreements between family members are resolved before they turn into a business crisis.

Do you have an essay on this topic? Submit it below in the comments for a free band score estimate.

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Manjusha Nambiar

Hi, I'm Manjusha. This is my blog where I give IELTS preparation tips.

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Pros and Cons of Running a “Family Business”

Your dream of running a business might include an image of your family working beside you.

But if you decide to try and turn that dream into a reality, it isn’t necessarily going to be all rainbows and sunshine.

Although many family businesses continue to succeed and thrive, even long time family owned business have problems.

The truth is that there are both pros and cons of running a family business. Here are some things you should know before you attempt it.

Table of Contents

Pros of Running a Family Business:

Greater incentive to work hard.

One of the possible benefits of running a family business is that family members may work harder than they would if they were working somewhere else. In other words, it could help you ensure the success of your business. This is because they have a vested interest in the success of that business.

Tax Advantages

If your family business includes your under-aged children there can be some  tax advantages to hiring them in the business. But you will want to be careful to make sure they are not being paid for work not done. Good documentation is critical.

Furthermore, if you know you will be passing the business on to your children in the event of your death, there are          additional effects to consider. You would be wise to consult a lawyer ahead of time to ensure everything is handled properly from the beginning.

You Know What You’re Getting

When you involve family member in the running of a business, you already know what their personalities are as well as their work ethic. You run less risk of hiring someone who interviewed well but then doesn’t perform up to expectations on the job.

Shorter Learning Curve

Having had family members around your business before you bring them in as an employee can be an added bonus. They are most likely already somewhat familiar with the business which can decrease the amount of time you need to spend getting them up to speed. What this adds up to is a savings in training costs for your business.

Work Schedules Can Be Adjusted

Another benefit of running a family business is that you can sometimes cover for each other when the need arises.

Let’s say you need to be away for an appointment or a child’s activity at school. Someone else in the family might be more willing to step up and do what is needed while you are away than if it were just another employee. As a family, you have the ability to cover each other when unforeseen events come up too.

More Relaxed Environment

As long as there are no major family conflicts it can be relaxing to work with family over other people. You don’t have to take the time to get to know each other and figure out likes and dislikes because you already know each employee well.

Saves Time and Money

When you aren’t hiring outside the family it saves time and money for the business. You don’t have to spend time and money advertising and interviewing. Additionally, as I already mentioned, training time can be decreased.

Decision Making Might Be Easier

In a family run business there can be less office politics involved. When decisions must be made it can be easier to get the job done than going through the channels of a traditional business.

Cons of Running a Family Business:

Family can be distracting.

Petty family disagreements can pull your focus away from running your business. It could be harder to concentrate on the details that matter, such as what your customers want or how to improve your products or services when you run a family business.

Hard to Separate Work and Home

When you work closely with your family, you may find you bring work home and then take family issues to work with you. If you are having any kind of disagreement with your spouse or family it can bleed over into your business and drive customers away. Additionally, some people need the separation of work from family.

Your Business Could Be More Vulnerable

In the event of a divorce , if your spouse works in your business, you could end losing all or part of it during the divorce proceedings. Of course, there are ways to protect yourself and your business. However, you should consider carefully all of the complications that could arise from running a family business before you involve them in business dealings.

They May Break the Rules

One of the risks you take in hiring family members in your business is that they may break the rules and think it is ok. It’s possible they might not be doing it consciously. Or, they might do it knowing that since they are family you are less likely to fire them. Either way they take advantage of the fact that they aren’t just employees but also family and have special rights other employees don’t have.

Causes Hard Feeling with Other Staff

There needs to be consequences when family members break the rules. If not, other staff members could begin to build up resentment. Promotions and raises should be documented and deserved. Infractions should be dealt with just as fairly and swiftly as with other employees.

Lack Skills for the Position

You may feel you must hire family member to work in the business even if they do not have the right skill set for the job. In direct contract to saving your business some money by hiring family this will cost your business both time and money. It could even spell disaster for your family run business and run it into eventual ruin.

Too Many Chiefs

If your family run business does not clearly define who is in-charge it could spell disaster. When everyone feels they have equal footing and you have too many bosses and opinions, how do other staff members know who to listen to? What if two different bosses give two different, directly oppositional sets of instructions to another non-family employee? These issues must be ironed out if the family business is to be run successfully.

Negative Feedback Not Taken Well

If you have to give out a criticism or correction to a family member it can cause strife in the workplace of a family run business. Negative job performance feedback can be taken too personally. That could impact the entire family unit since everyone already shares such close emotional ties. In addition, feedback could be dishonest if the family member sharing it is trying not to hurt the receiver’s feelings.

Promotions May Be Hard to Get

Sometimes when you own and run a family business you tend to be harder on your family members than other staff. This could cause you to be less likely to give out promotions to family member and more likely to pass them over in favor of other employees.

Stale Ideas

Agreeing is great, but when you really need a fresh perspective it can be harder to get when you work closely with family. Because you are all family, you may be more like to think alike or not speak up for fear of offending someone. Having some employees who are not family members and listening to their input can help.

You can run a family owned business, but keep in mind the pros and cons of running a family business before you decide to make it a reality.

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many businesses today are run by family members. Do the advantages of a family-run business outweigh the disadvantages?

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Answer the 'Advantages and Disadvantages' topic

IELTS advantages and disadvantages questions normally give you a statement and ask you to comment on the advantages and disadvantages of that statement.

Answer structure for the type of essay

• Introduction
• Body paragraph 1 – advantages
• Body paragraph 2 – disadvantages

Examples to start your body paragraph:

• The main advantage is...
• The disadvantage of this...
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10 Advantages and Disadvantages of Family Businesses

• Redaction Team
• July 18, 2022
• Entrepreneurship , Family Business

Family businesses can go to extremes: in some cases we will find some that are a clear example of success while others were a failure from the way they were planned.

The advantages family businesses have are plenty and those who are able to cope with its challenges can achieve business objectives in the long term.

Read on to learn about the advantages and disadvantages of family businesses that you can take advantage of, or that can be detrimental if you don’t realize it in time.

Advantages of the Family Business

Long-term planning for generations.

When you are a solitary entrepreneur, it is very complicated to plan something for future generations, since the intention of every businessman is to make his brand grow over time and his services or products cover more and more space on the globe. 

One of the benefits of family businesses is the fact that the first generation can lay the foundations for the next one, as committed as it will be to morality and sentiment, to execute the plans that had already been foreseen, either the same or improved, taking care of the interests of their predecessors. 

Long term planning gives an internal competitive advantage to family owned business, due to the fact that decisions are taken based on the future returns.

What it started as a small business, a long term plan has as an objective to convert it into a bigger business.

Positioning in the local market through trust in the family

It may seem a little bland, but the reality is that when we hear that the work team is a family, we gain more confidence towards it because of its traditional values.

It is then much easier to reach a larger number of customers motivated by the trust that family can give.

Family values

When you have a company one of the most difficult points is to pass on the values that you have as owner to your employees, and many times this task is even more difficult when they have not been raised from home with the same values that led you to be in charge.

Running family businesses also means a posture of family values in the local market where it operates. 

One of the advantages of family businesses has to do with the values that will have the team that has been raised under the same image and beliefs.

We can highlight responsibility, commitment, respect, the need for justice, and many others that can make a company stand out from its competition thanks to the work ethic.

Strong values bring business competitive advantage since there is an image that is built on them.

Resilience in times of crisis

The commitment one has to a company that belongs to us is something that can never be compared to anything else, not even that of the most loyal employee.

As they always say, the captain is the last one to jump off the ship.

In times of crisis it is common that a large part of the team decides to leave to look for better opportunities, and while the business family owners are fighting for their dreams, others simply need their payments.

Among family owned businesses, desertion becomes much more complicated, so there is a great probability of union and efforts. 

Trust in the members of the work team

Another advantage of family businesses is that you know perfectly at least those people who occupy important positions, which makes it much simpler to trust them with their tasks and take them into account when making decisions.

Running family businesses rely on having in your team, people that either you took care and educate them, or with whom you grew up. 

The attitude the family members have will be the one that show how the family business will run.

Disadvantages of the family business

Company conversations are not time sensitive (discussion of the company outside working hours)..

This is a problem that many families who do not work in the same place have, now come to imagine what will happen to those who also share at work. And is that work conversations do not seem to end with the schedule to be met.

It represents one of the biggest disadvantages of family businesses for the simple fact that it pollutes the environment. The family needs its shared time to go beyond work. Talking about personal issues, entertainment, among others, makes communication healthy and improves the family atmosphere.

Emotional conflicts

If in companies it is generally recommended that there is no strong emotional bond between employees because this may cause some complications, imagine what can happen when that bond that unites them is also carried in the blood … It can be chaotic. 

No family is perfect, there will always be those who do not agree, or who are angry about something, or even those who do not feel close to another member. The most advisable thing to do in these cases is always to take the time to eventually create an environment for reconciliation; something that cannot be done if you have to see each other 8 hours a day. 

Lack of commitment from family members

One of the most frequently seen disadvantages of family businesses is the lack of commitment. “It’s my parents’,” or, “It’s their dream, it’s not what I want for myself,” are often testimonials from those forced into a role.

Adding non-working family members to the payroll

For this point we will use an interesting example, and it has been said by Selena Quintanilla herself that she added her family members to the payroll so that each month they would receive a check corresponding to the earnings of their efforts, even when they had no role in the management of her image or brand.

In many cases, families are guided by their feelings and think that because they have something established they can all benefit from it. Not only is it only fair to benefit only those who have worked with it, but it can also end up draining money from the business.

Mixing the company's cash flow with cash for personal expenses.

This is one of the disadvantages of family businesses that we see in even the smallest ones, such as when there is a store and someone grabs cash from the till because they need to buy something.

Or maybe he feels that because he is a member he can get his hands in the administration unduly.

It is of utmost importance that the company’s cash flow, as well as any other cash reserves, be respected.

Every employee, regardless of position, should be able to count on his or her salary and manage his or her life with it so as not to compromise the company’s financial stability or create bad habits. 

Does it worth to run a family business regardless of the advantages and disadvantages?

As anything in life, there are pros and cons of running a family-owned business.

But the answer to the question, will depend on your actual goals as an individual and your personal desires for your future.

Certainly, the statistics show that the businesses that have more longevity in our time are those where family members are involved since their creation and they are still shareholders of them.

If you have created a set of values of your own, and don’t have the same mindset of your family, then it is not a selfish move to go find a job by your own or even start your business.

And also, it will be ok if you are willing to keep up with running a business that was started by the founders and you are happy with that decision.

What will make worth the decision, is if the decision of working in a family-run business comes from a sincere and honest work.

Working or developing a business may become a boulder on the back if the individual is actually not enjoying the work, and doing it from a perspective of, “It has been what my family has done for years”.

Family conflict may appear, and family members may not be able to agree to your ideas always, that is why taking into balance the pros and cons is important so that it can help you to take decisions for a better future with a long-term business that reach out success. 

Is investing your time and money in running a business with family members a good idea?

One thing learned out from the Richest man of Babylon, is a part where it is mentioned about investing with family.

It is mentioned the case of the sister’s husband who wants to start a business and needed money.

The message of this part is as follows.

 “Instead of wasting your money helping people who do not guarantee your return, it is better to invest it in a business where you are sure of your return.”

So, if the family business is already running and showing succes, and you can guarantee that the money you are putting in is going to be returned, then go ahead.

But if you are taking the decision based on feelings, and just to help out a family member without seeing first any sign that you are going to obtain a return, than probably it will be a bad idea.

This can be one of the disadvantages of a family businesses, because people can have this inner conflict of what to do and what is correct or incorrect even if it is family.

Doing business with your family should be ok, if both sides are already showing the signs of commitment and desire of success of the business.

Family and business sometimes is a complicated matter, so it would be better to invest something else rather than money.

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