Owning a business and being their own boss is a dream for many. It turns into a reality by starting a family business, more often than not. Some family businesses have even been operating for multiple generations. How can these companies beat the odds and still be in business 5 years, 15 years, or even 50 years down the road? By taking the pros and cons of a family business seriously. Here are some of the key points to think about.
What Are the Pros of a Family Business?
1. There are often greater levels of trust.
When working for a family business, they are working with people whom they have known for years – and sometimes their whole lives. This establishes a higher level of trust in the working relationship, help to nurture new skills, and give everyone involved more self-confidence in the completion of daily tasks.
2. The rules are often bent to reflect needs.
Many family businesses offer a relaxed atmosphere within the working environment. Instead of demanding that workers be in at 9am on the dot, for example, a family business may allow workers to leave early, arrive late, or take care of personal matters in the middle of the day. As long as the hours get put in during the week at some point, that tends to be the most important consideration.
3. Everyone is bought into the mission.
In a family businesses, people typically understand that their individual actions do more than bring in a personal paycheck. They are working toward a greater good where everyone is able to succeed. Because of this, more concentric work is completed within the scope of the company mission so that forward progress can be slow and steady.
4. The traditional employment requirements for a job may not be necessary.
If someone is great at marketing, but maybe doesn’t have a marketing degree, it can be difficult to find an open position within their preferred field because they don’t meet certain screening requirements. In a family business, they may not always be true. Some families are willing to hire from within because they know the personal history of the worker and don’t focus on the educational or professional history.
5. There are fewer levels of bureaucracy.
In a family business, it is often easier to make bigger decisions because there are fewer levels of red tape that must be navigated. This makes it easier to approve major projects, pursue certain contracts, and implement new ideas.
What Are the Cons of a Family Business?
1. Families will undoubtedly have conflicts from time to time.
When you live and work with the same people day after day, nerves always get frayed. People might begin to assume they know what someone else wants… and the reverse is often true. Maybe one family member wants to take the company in one direction and the rest want to go a different way. Unless these conflicts are proactively resolved, they can tear a family business apart.
2. There tends to be a preference on family over other workers.
If a family business has hired outside workers, then high levels of resentment can begin to form if family members are promoted consistently over the other workers. It is not uncommon to see family members promoted without any experience over outside workers who do have experience and this typically leads to a decrease in production and higher turnover rates.
3. The personal and professional life gets easily blended.
When working in a family structure, the issues that happen at home will often come into work. The issues at work often go back home. This creates a negative impact on both environments, which ultimately affects the workers who are trying to do their jobs.
4. It can be difficult to see a new path.
In a family business, it can be very easy to agree on certain issues because everyone grew up in a similar environment. The life experiences are virtually the same. This can lead to group thinking that blinds the family to the changing realities of the business environment. At the very least, it can cause high levels of resistance to the changes that really do need to occur.
5. Exclusion may happen more often.
Because the lines of home and work are blended, a family may choose to hold business meetings at home or outside of work hours in other locations. When there are outside workers involved with the business as well, then this can make those folks feel excluded from the process.
The pros and cons of a family business often show that family loyalty happens above everything else, but that can be a good thing when others are included in the business process. Consider these key points to determine if starting or joining a family business is the right decision for you.