Type: Business
Pages: 4 | Words: 988
Reading Time: 5 Minutes

Some people believe that work and family are incompatible things, while others believe that collaboration brings people together even stronger than family ties. People can agree with both points of view. However, the whole thing is in specific cases. One family can be destroyed because of a common business and the other, on the contrary, can be strengthened. All existing family businesses can be divided into two types. In the first place is saving a huge number of small and medium-sized enterprises created by members of the family. For example, there are about 15 million small family firms in the U.S. First, a family business of this type is created to save money on the wages of employees, as the cost of wage labor is sometimes unaffordable for a newly opened company. The second type is the presence of huge family corporations and holding companies with world-famous names and a prolonged history. These companies were inherited for many times. England is singled out in this regard. There are about 16% of family firms that experienced more than four generations. Sweden differs with the largest share of working people in a family business – more than 60% of the working population. Italy is known for a large percentage of family-owned companies with a turnover of more than 1.5 million euros.

Advantages and Disadvantages of Family Business

There are many advantages of running a family business.  The first and probably the main positive aspect is financial gain. Relatively speaking, the members of one family will quickly regain the money invested, if everyone receives income from the same business. The profit fully replenishes the family budget and is not divided among strangers. Moreover, the likelihood of staff’s omissions or dishonorable conduct if they are relatives does not virtually happen: family ties imply openness even in business communication. Consequently, you will not encounter any troubles and mischief from subordinates or partners, if you are a family. The other important advantage of a family business is that children can be involved in it and they can eventually inherit it. In this case, the tradition of a family business, backed up by the experience of generations, will be a good foundation for business success in the future. Trust is at the core of a family business. There is always more confidence in relatives than in the incoming employee. Even if the choice is made in favor of a relative, who is often a layperson, a small company significantly reduces its risks. The risk of deficiency of profits due to unprofessional staff is always less important for a small firm than the risk of incurring losses from activities of a “freshly-hired” shifty specialist. Therefore, a family business always strives to provide relatives with key positions, despite the fact that they have to acquire knowledge and skills already in the process and learn from their mistakes.

The first and perhaps the most important disadvantage from the point of view of business management is unprofessional staff. It is a rare case when all relatives involved in a company are good specialists in the required areas of the company. An ideal situation – a competent director, a professional accountant, responsible and qualified staff, where all of them are members of one family – is almost impossible. An unreasonable appointment of incompetent people just because of family ties often leads to the collapse of a family business. On the contrary, pride and desire to compete provokes quarrels in the company, and sometimes its complete collapse. Another weakness of a family business is in the relationship within the team. If at home a team becomes a family, at work it is called staff, and relative relations are not always for good. Communication within the family group is facilitated by long-term bonds. However, at the same time it is very complicated. A mismatched formulation can destroy not only a company, but even a family. In this regard, family relations have a negative impact on business communication. It is particularly noticeable in critical situations. There is another seemingly insignificant reason: a lack of respect and business authority among relatives. When one person takes the initiative in business, and the rest are skeptical about it, pending a full failure, it is difficult to expect the success of a company. Couples leading business together are not a rarity. Spouses who share not only feelings but general principles and aspirations often achieve considerable success by opening a joint venture. If roles in business between spouses are clearly defined and there is no competition between them, business can exist for a long time and bring stable income. The biggest failure when a common business can suffer is when the couple gets divorced. In this case business is often divided and loses its stability.

There are many examples when a small family business became a great family corporation. England is famed for the oldest family corporations. One of the most famous and successful is the Rothschild family. It owns a large part of banks and other enterprises in Europe. Other well-known family-owned companies doing business during many generations are Swedish concern IKEA, the Japanese company SONY, famous Italian clothing brands Etro and Benetton. There is one prosperous wine company Château de Goulaine in France, which leads a family business since 1004.

A new family business is perceived as a newborn baby by family members that requires an investment of time, effort and care. As soon as the business grows and develops, its founders desire to get a piece of a lucrative pie. A test of family values begins. If members of a family business can easily come to an agreement about ownership, interests in business and profits, it is likely that in future they will be able to make difficult decisions together and celebrate victories. The main thing is that all employees (family members) should be professionals and really pull a business-boat forward and do not slow motions by intrigue and conflicts.

Copy-pasting equals plagiarizing!

Mind that anyone can use our samples, which may result in plagiarism. Want to maintain academic integrity? Order a tailored paper from our experts.

Get my custom paper
3 hours
the shortest deadline
original, no AI
300 words
1 page = 300 words
This is a sample essay that should not be submitted as an actual assignment
Need an essay with no plagiarism?
Grab your 15% discount
with code: writers15
Related essays
1 (888) 456 - 4855