essay about family business

Essay on Family Businesses

Family Business Overview

Currently, business family is becoming more influential and simpler to manage. This type of business is mainly owned by people with close relation to other forms of business internationally (Aguila and Briozzo, 2020 pp 49). Therefore, a family business can be defined as a business type in which two or more family members or related people form a cartel, thus operating as one firm. In most cases, the business’s complete control lies within the family members since they have common objectives to achieve. According to the research, the family business is recognized as one of the international forms of business contributing to the growth and development of most countries’ economies. Nowadays, the family business is believed as the engine of industrialization in most countries since they have contributed significantly to revenues and tax provision, especially to the governments (Ahmad and Yaseen 2018 pp 345). For any country to achieve its Gross Domestic Product (GDP), micro-business, such as family business and other small operating businesses, should provide taxes and revenues to the government.

Even though family business is categorized as micro, multinational family corporations can operate in more than two countries. Most of these multinationals’ family businesses are located in the United States of America, the United Kingdom, and Colombia. Basing the research conducted by the Institute of Family Business (IFB) 2012, about 5millions micro-businesses operating internationally are private sectors. These macro businesses contribute approximately 76% internationally to create job opportunities for the family members and other none related people (Antcliff  et al.;  2020 pp 34 ). In the United States of America, micro-businesses such as family businesses are more considered than governmental sectors. Family businesses are believed to have contributed positively to providing affordable products and services to most unstable people.

In most cases, the family business is owned and directed by family members, thus minimizing the chances of loss due to poor organization. The main strength of a family business is that there are no interferences since its characterized by monopolistic. Here are some examples of the most successful family business in the world.

Family-owned businesses are believed to be the oldest form of business organizations. Since the 1980s, the research shows that family business has distinct significance, especially in raising the county’s Economy; that’s why most countries consider operating micro-businesses as big firms and companies.

These family businesses are currently recognized as crucial and dynamic participants contributing to the highest world economy (Brenkman, 2020 pp 67-89). Basing U.S statistics, 90 percent of the United States of America owned family business. The growth and development of family business have mainly contributed in some countries such U.K. and Colombia. According to the IFB, the United Kingdom record more than a 4.8million family business which occupies more than 88 percent of the total business conducted within the United Kingdom. Currently, family businesses are the backbone of the United Kingdom economy, thus contributing about $ 150 billion annual tax. Within the age of huge businesses, it is significant to understand why family businesses are emerging to be the most successful than other forms of enterprises. In the United Kingdom, family business is growing at a higher rate, thus tending to outperform other close companies in physical markets. Naturally, United Kingdom is a unique country dominated mainly by heritage and encourages most families to inherit their parents’ work even if they pass away (Caputo  et al.; 2018). The aspects of origin in the country elaborates on why the percentage of family businesses is rapidly increasing every year. In most cases, the family businesses are operated depending on the types and complexity of each. For instance, the chart below shows different kinds of family businesses and how they are managed.

The main reasons family businesses are more than other private sectors are that they are easy to perform and operate since they do not need to hire specialists or managers. Instead, they are primarily used and ran by related people. Additionally, these types of businesses do not incur much labor costs since they mostly rely on family members who are always available to offer free assistance (Seaman  et al.;  2019 pp 345). According to Bolton Consulting Groups (BCG) arguments, the analysis shows that family businesses contribute about 45 percent of all the companies and organizations. To prove this, Dyson and JCB are good examples of the most prominent family businesses in the United Kingdom, which participate within their country and internationally. In connection to this, family businesses are the largest employers in the United Kingdom. So, it’s clear that family businesses have more benefits since people are derived by their determinations and what they need to achieve after operating their business.

Characteristics of Family Business

Family businesses are characterized by several features, which makes them operate successfully, unlike other companies. Family businesses are monopolistic by nature since only family people, and other relatives can run the business. In most cases, the business will only operate depending on the culture and norms of the family, thus not satisfying customers’ needs. From a perspective, a family business has operating hours and mostly may limit people from purchasing since customers have different times of purchasing. Basing the analysis of 33 countries, family businesses are simple to manage since their structure is less complex than other operating businesses (Chang  et al.; 2020 pp 56). The design and characteristics of a family business depend on the number of people involved in the business operations. Concerning this, some features can be tangible while others are intangible. One of the most crucial characteristics of a family business is its strong trust and the inter-relationship between the family members.

In contrast to the other companies, there exist constant ideological differences between the management and other stakeholders within the industry. Regardless of the type of ownership and management team, the entire family members remain the critical participants in the company and can immediately decide to manipulate the nature of products they deal with. Another characteristic of a family business is that the management is always informal, and it’s hard to recognize any mistakes arising from the way of operations.

Most managers of these businesses have no definitive ideas to promote the business’s operations from one level to another.

The excessive intermingling between the company and family members may encourage financial problems since most of the business’ capital can be directed to family issues that were not planned in the money. In some family businesses, there is no working time and private hours. Therefore, the operation of the company may become monotonous to some members. Naturally, doing one thing over a long time reduces interests (Pham  et al.; 2019). Even though a family business may consist of other non-family members, the ownership and management of the company lie within the family members only. The figure below shows an example of business ownership and its structure. This is one of the main characteristics of family business currently

Therefore, the family business needs more management teams to ensure proper supervision is achieved. In some countries such as Canada and Australia, family business focuses on the companies’ long-term sustainability rather than gaining considerable profits. Most family businesses have limited access to goods and services; therefore, all characteristics of family business are passed from one generation to another. The generation to come will have to use unique features but what they think it’s good. However, according to Ryann’s arguments, family businesses have supported entrepreneurship since most family members another characteristic of a family business is complete control in terms of productions since the family is responsible for any required materials. However, most companies produce limited goods and services, such that there are no suppliers that can benefit none family people. To have a robust business, most families form cartels and partners with other more developed cooperation’s thus getting more chances of thriving in business.

Challenges facing family business

Even though family business is simple to manage, there are several challenges. The main challenge affecting family businesses is a generation gap. When many generations of different families are administering the company, the rate of changing from one technology to another might take long since not all people may understand it (Friar and Clark, 2021). For instance, the founders of some family businesses may resist handing off the management responsibilities to other upcoming families. This action creates characteristics of monopoly since most leaders make decisions based on their perspectives and ignoring the opinions of others. Even though younger generations may have some great ideas on how the business can operate efficiently and accurately, they are never involved in the business operations. This means that the company will continue working within flawed and outdated technologies since they lack the knowledge and skills to implement the new ideas (Heinonen  et al .;2020 pp 1-34). Due to this, there may occur conflicts and frustrations since some employees feel that their voices and opinions are not considered in the implementation of the business.

Currently, most family members fail to understand that everybody can contribute positively to the industry. To overcome such challenges, the family should negotiate towards the succession of leadership without chaos. Another challenge associated with family businesses is business culture. In this type of business, it’s tough for the company to accept all cultures and values from different families. Even if related people form the industry, some people have different cultural opinions that may not match other family members involved. For example, Samsung business involves different families with different ideological thinking thus may be difficult to operate within the same culture. In this case, most family businesses use basing the cultural system of the paramount families. The interferences of business can lead to low turnover rates, thus reducing the productivity of the company. Setting up payment strategies can currently face other problems facing family business (Núñez  et al.,  2018). Determining payments in the industry may raise conflicts because some members cannot be paid equally. The prices should be determined based on the duties and responsibilities of the individuals; however, some family members may demand equal payment, thus building uncertainty and mistrust. Some employees may get annoyed in the reaction to such cases since they don’t expect to work hard and get fewer payments.

When employees are not positively encouraged, they may lose morale, while others may decide to leave the job to look better. Therefore, this means some family members will lose business morale and, with time, will seize supporting business operations. Another challenge affecting family business is mixing business with home life. According to the research, when family members work in the same companies and organizations, it becomes challenging to make definitive decisions without basing personal feelings. (Kanade  et al.; 2020) Due to this, family businesses can operate poorly due to family events, whereby families may decide to make frequent holidays that do not concern business operations. The issue of holding every family member in the same standard is another challenge facing family enterprises. For instance, some employees may be spending a lot of time in the breakfast rooms than in the business desk operations. The aspects of some members westing time in the busines may contribute low output thus reducing the business’s productivity.

When some people in the business are not operating according to business formalities, the other employees may develop negative implications. They may not work smart to achieve the objectives and anticipated target of the organization. Additionally, these behaviors will create laxity and mistrust in the organizations. According to the research, the most family business faces interferences and challenges from within the family members especially those in the top management (Michiel  et al.; 2017 pp 369). Planning for the future is another upcoming challenge facing the operations of most family businesses. Since most family enterprises are characterized by solid planning, it becomes difficult to modify the planned decisions.

Consequently, making decisions becomes tedious because of the extended channels to be followed. If the business involves more than two families, the decisions are made based on both families’ final discussions. Therefore, before plans and decisions are made, there must be consultations from all the family and relatives. Nowadays, there is a need for family members to understand how the business should be conducted to avoid such challenges.

Recommendations

To overcome the social and economic contributions made by the family businesses, there are crucial aspects that we need to look at. Both characteristics and challenges associated with family businesses can be overcome if the family members get serious with business and stop focusing on things that do not relate to the business (Michiel  et al.;,  2017 pp 369). According to the discussions, most family businesses are affected by top management’s ignorance since they think they control everything in the business basing their knowledge. According to my perspective, family businesses can only improve if the management team considers the opinions of others. To have good business, there is a need to involve all the employees in the decision-making process. To have a better understanding of family businesses, the following recommendations should be taken into account. The performance of the business should be optimized and act as a reference to other generations to come. Family businesses are believed to have contributed positively to providing affordable products and services to most unstable people.

In most cases, the family business is owned and directed by family members, thus minimizing the chances of loss due to poor organization. Additionally, the operation of a family business should not base on the specific family since it may promote hatred and non-stoppable conflicts within the related people (Musso  et al.;  2020 pp 23). Also, the business should be in the position to serve the general population without considering if the buyers come from the same clan. The family business will act as a catalyst that speeds the growth and development of the Economy. For better family business success, the younger people should be involved in the management team since they might have more technical skills to help family businesses thrive well.

To have peace and harmony within the industry, there should equal distribution of the profits gained from the company since its efforts of every individual performing in the industry. For instance, when some industries are not operating according to business formalities, the other employees may develop negative implications. They may not work smartly to achieve the objectives and anticipated target of the organization (Musso  et al.;  2020 pp 23). The family should be considered as the primary influence both on the companies’ operations and strategic orientations. For this reason, the management and combination of the several families will positively contribute to the growth and prosperity of the business even in the future.

Self-reflection on family businesses

The family business is one the best enterprise to operate despite its challenges. Basing the research analysis, the family business is simple to use compared to all other forms of business internationally. Basing my views, the family business has benefited most people worldwide by providing employments to non-employed people. Even though the company operates without physical interference from governments, it faces some challenges which can be solved basing its structure. This reflection is a way of considering all the characteristics and challenges that have been facing family businesses. According to my arguments, a family business can improve if they follow all the above recommendations. Additionally, there is a need for the managers and supervisors to understand that the success of most companies depends on decision-making.

To sum up, the family business has contributed to social-economic growth, especially in European countries. According to the research, these businesses have contributed about 67% of Gross Domestic Products, especially in the United States of American and the United Kingdom. Regardless of the type of ownership and management team, the entire family members remain the critical participants in the company and can immediately decide to manipulate the nature of products they deal with. Another characteristic of a family business is that the management is always informal, and it’s hard to recognize any mistakes arising from the way of operations. Even though family business is categorized as micro, multinational family corporations can operate in more than two countries. Most of these multinationals’ family businesses are located in the United States of America, the United Kingdom, and Colombia. The prosperity of many family businesses depends on their structure and operational structure. Basing the research arguments, the family business will continue been in the top in European’s countries since families believe in amalgamation is more effective than individualism.

Aguilar, V.G. and Briozzo, A., 2020. Family businesses: capital structure and socio-emotional wealth.  Investigación administrativa ,  49 (125).

Ahmad, Z. and Yaseen, M.R., 2018. Moderating role of education on succession process in small family businesses in Pakistan.  Journal of Family Business Management . pp 345

Antcliff, V., Lupton, B. and Atkinson, C., 2020. Why do small businesses seek support for managing people? Implications for theory and policy from an analysis of U.K. small business survey data.  International Small Business Journal  pp 34

Brenkman, A.R., 2020.  Exploring the management succession process in small and medium-sized family businesses  (Doctoral dissertation, North-West University (South Africa)). pp 67-89

Caputo, A., Marzi, G., Pellegrini, M.M. and Rialti, R., 2018. Conflict management in family businesses.  International Journal of Conflict Management .

Chang, A.A., Mubarik, M.S. and Naghavi, N., 2020. Passing on the legacy: exploring the dynamics of succession in family businesses in Pakistan.  Journal of Family Business Management . Pp 56

Friar, J.H., Ippolito, J. and Clark, T., 2021. The challenges of transitioning to professional selling in family businesses. In  A Research Agenda for Sales . Edward Elgar Publishing.

Heinonen, J. and Ljunggren, E., 2020. It’s not all about the money: narratives on emotions after a sudden death in family businesses.  Journal of Small Business & Entrepreneurship , pp.1-23.

Kandade, K., Samara, G., Parada, M.J. and Dawson, A., 2020. From family successors to successful business leaders: A qualitative study of how high-quality relationships develop in family businesses  Journal of Family Business Strategy , p.100334.

Michiels, A. and Molly, V., 2017. Financing decisions in family businesses: a review and suggestions for developing the field.  Family Business Review ,  30 (4), pp.369-399.

Musso, F. and Francioni, B., 2020. The strategic decision-making process for the internationalization of family businesses.  Sinergie Italian Journal of Management ,  38 (2), pp.21-43.

Núñez-Cacho, P., Molina-Moreno, V., Corpas-Iglesias, F.A. and Cortés-García, F.J., 2018. Family businesses transitioning to a circular economy model: The case of “Mercadona”.  Sustainability ,  10 (2), p.538.

Pham, T.T., Bell, R. and Newton, D., 2019. The father’s role in supporting the son’s business knowledge development process in Vietnamese family businesses.  Journal of Entrepreneurship in Emerging Economies .

Seaman, C., McQuaid, R. and Pearson, M., 2017. Social networking in family businesses in a local economy.  Local Economy ,  32 (5), pp.451-466.

Visser, T. and van Scheers, L., 2020. HOW IMPORTANT IS ENTREPRENEURIAL ORIENTATION FOR FAMILY BUSINESSES?.  Management: Journal of Contemporary Management Issues ,  25 (2), pp.235-250.

Wang, Y. and Shi, H.X., 2020. Particularistic and system trust in family businesses: The role of family influence.  Journal of Small Business Management , pp.1-35.

Yoshida, S., Yagi, H. and Garrod, G., 2020. Determinants of farm diversification: entrepreneurship, marketing capability and family management.  Journal of Small Business & Entrepreneurship ,  32 (6), pp.607-633

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Essay on Family Business

Students are often asked to write an essay on Family Business in their schools and colleges. And if you’re also looking for the same, we have created 100-word, 250-word, and 500-word essays on the topic.

Let’s take a look…

100 Words Essay on Family Business

What is a family business.

A family business is a company owned and run by members of one family. Often, parents start the business and later their children join to help and learn. It’s like passing a special skill or tradition from one generation to the next.

The Good Sides

Working with family can create strong bonds because everyone cares deeply about the business. Trust is usually high, and decisions can be made quickly. Plus, the success of the company can make the family proud.

Challenges Faced

Sometimes, working with family can lead to arguments, especially if people disagree on how to run the business. It’s important to balance work and family time to keep relationships healthy.

Planning for the Future

For a family business to last, planning is key. This means training the younger family members early so they can take over smoothly when the time comes. It’s like passing a baton in a relay race.

250 Words Essay on Family Business

What is a family business, working together.

In a family business, parents, siblings, and sometimes extended relatives work together. This teamwork can make the business strong because family members often trust each other a lot. They share the same goal: to make the business successful.

Passing Down the Business

One special thing about family businesses is that they can last many generations. Parents teach their children how to run the business, and when the time comes, these children take over and keep the business going. This tradition can keep a family close and united.

Running a family business is not always easy. Sometimes, family members might disagree on how to do things. Also, it can be hard to decide who should be in charge or how to share the money the business makes. It’s important for family businesses to find ways to handle these challenges.

The Importance of Family Businesses

Family businesses are important because they create jobs and help the economy. They can also make a town or city feel more like home because they often have a personal touch. Many people enjoy buying from family businesses because they like to support families working together.

500 Words Essay on Family Business

A family business is a company owned and run by members of one family. Often, these businesses are passed down from parents to their children over many years. Family businesses can be small shops, restaurants, or even big companies that make a lot of money. They are special because they mix family relationships with work.

Starting a Family Business

In a family business, you might find parents, children, and sometimes even cousins and grandparents all working together. Each person might have a special job. For example, one person might be good at selling things, while another is good at keeping track of money. Working with family can be nice because people care about each other, but it can also be hard if they disagree.

Passing the Business Down

One of the most important parts of a family business is passing it on to the next generation. Parents teach their children how to run the business so that when they get older, the children can take over. This way, the business stays in the family for a long time, and each generation can add new ideas to make it better.

Benefits of Having a Family Business

Challenges in a family business.

Running a family business isn’t always easy. Sometimes family members might argue about how to do things, or they might find it hard to make big decisions. It’s also tough when a family member wants to do something else with their life and leave the business. The family has to find ways to solve these problems so the business can keep going.

In conclusion, a family business is a special way for families to work together and make a living. It can bring family members closer and help them create something that lasts for many years. Even though there can be challenges, the love and trust within a family often make the business stronger. Family businesses are not just about making money; they are also about keeping family traditions alive and helping communities.

Apart from these, you can look at all the essays by clicking here .

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107 Family Businesses Essay Topic Ideas & Examples

Inside This Article

Family businesses are a cornerstone of many communities around the world. These enterprises are often passed down through generations, with family members working together to run and grow the business. Family businesses come in all shapes and sizes, from small mom-and-pop shops to large corporations.

If you are tasked with writing an essay about family businesses, you may be wondering where to start. To help you get your creative juices flowing, we have compiled a list of 107 family business essay topic ideas and examples. Whether you are looking to explore the challenges faced by family businesses, the benefits of working with family members, or the impact of family businesses on the economy, there is a topic on this list for you.

• The history and evolution of family businesses
• The role of family values in shaping a family business
• The challenges of succession planning in family businesses
• The benefits of family businesses for local communities
• The impact of family businesses on the economy
• The unique management styles of family businesses
• The importance of communication in family businesses
• The advantages and disadvantages of working with family members
• The role of women in family businesses
• The impact of technology on family businesses
• The benefits of family businesses for employees
• The role of innovation in family businesses
• The challenges of balancing work and family in a family business
• The impact of globalization on family businesses
• The importance of trust in family businesses
• The role of family dynamics in shaping a family business
• The impact of cultural differences on family businesses
• The challenges of managing conflicts in a family business
• The benefits of having a family business mentor
• The impact of family businesses on the environment
• The role of family businesses in preserving traditions
• The challenges of managing a family business during a crisis
• The benefits of family businesses for customers
• The impact of social media on family businesses
• The importance of ethics in family businesses
• The role of education in preparing the next generation to take over a family business
• The challenges of managing a family business in a competitive market
• The benefits of having a diverse workforce in a family business
• The impact of government regulations on family businesses
• The role of networking in growing a family business
• The challenges of balancing family and business responsibilities in a family business
• The benefits of having a strong company culture in a family business
• The impact of generational differences on family businesses
• The importance of succession planning in ensuring the longevity of a family business
• The role of branding in building a successful family business
• The challenges of managing family business finances
• The benefits of having a clear mission and vision in a family business
• The impact of mergers and acquisitions on family businesses
• The role of social responsibility in family businesses
• The challenges of adapting to change in a family business
• The benefits of having a strong support system in a family business
• The impact of family businesses on employee retention
• The importance of work-life balance in a family business
• The role of conflict resolution in maintaining harmony in a family business
• The challenges of managing a family business in a recession
• The benefits of having a diverse product line in a family business
• The impact of competition on family businesses
• The role of technology in streamlining operations in a family business
• The challenges of expanding a family business into new markets
• The benefits of having a strong marketing strategy in a family business
• The impact of industry trends on family businesses
• The importance of customer feedback in improving a family business
• The role of employee training in a family business
• The challenges of managing a family business with remote employees
• The benefits of having a family business advisory board
• The impact of customer loyalty on family businesses
• The role of family businesses in creating jobs
• The challenges of managing a family business with multiple locations
• The benefits of having a family business succession plan
• The impact of social media marketing on family businesses
• The importance of data analytics in optimizing operations in a family business
• The role of family businesses in promoting economic growth
• The challenges of managing a family business with limited resources
• The benefits of having a strong customer service team in a family business
• The impact of employee morale on family businesses
• The role of employee recognition in motivating staff in a family business
• The challenges of managing a family business with seasonal fluctuations
• The benefits of having a strong sales team in a family business
• The impact of customer reviews on family businesses
• The importance of employee training and

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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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Family Business Essay Samples

Advantages and Disadvantages of Running a Family Business

Introduction

When a company gets off the ground and running, one of the first tasks is to hire employees.  Often, small businesses turn to those closest: their family.  Running a family business carries with it advantages and disadvantages. 

Advantages of running a family business

One of the primary advantages is also the main reason families become businesses: flexibility.  Having a husband and wife combo running the show means scheduling life around work is easier.  Further, worrying about who gets what pay cut or other business decisions is simpler than with a standard, non-relative employee.  Second, you can almost guarantee loyalty in family-run businesses.  Spouses that help run the enterprise aren’t likely to jump ship to a competing venture.  Second, the costs of keeping the business “in house” are typically significantly lower.

Disadvantages of running a family business

Attached to those advantages are an equal number of disadvantages to consider.  Businesses are broiled in conflict.  Studies show that upwards of nine out of ten fail.  A failing business is a stressful one and conflict at work can bleed over into conflict at home.  Differences of opinion at work can become arguments at home.  It’s tough to have a work-life balance when your work and your family are one and the same. Also, many family businesses attempt to fill roles with relatives when outside help would perform better.  While this may not be as important at the beginning; it can be a more acute problem once companies grow and require further specialization.  The best fit for a position, might be someone within the family, but might be a new, outside hire.

A family business comes with many pros and cons – just like any business type.  Just make sure you are prepared and understand what you’re getting into before embarking on your journey.  Good luck!

Structure Tips of an Essay about Family Business

The structure of an essay about family business can vary depending on the task and goals of the paper, but in general it can be as follows:

•  Interest the reader and draw their attention to the topic.
• State the purpose of the essay and present the main arguments or points of view that will be developed in the body.
•  Provide a brief introduction to the topic and context so that the reader can understand what will be discussed.
• Divide the main body into a few paragraphs, each of which will focus on different aspects of the topic or the development of individual arguments.
•  In each paragraph, present your main idea or argument and support it with facts, examples, quotes from works, or research.
•  Provide logical coherence between paragraphs and use transition words or phrases to smoothly transition from one idea to another.
• Develop and argue your point of view by presenting different aspects of a problem or issue.
•  Summarize the main part; highlight the main arguments and conclusions that were made.
• Lead the reader to the main idea of the essay and its significance.
•  Conclude your essay with a beautiful and memorable phrase or summary statement.

It is important to remember that the essay structure is flexible and can be adapted to suit the requirements of the assignment or your preferences. The main thing is to ensure logical coherence, consistency and integrity of the argumentation, as well as to be precise, clear and expressive in presenting your thoughts.

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If the topic of your essay is too difficult for you, get help from an EssayShark.com writer. They will write an interesting paper based on your requirements. The topic will be thoroughly researched and the question will be elaborated in detail. The essay will be organized and structured properly. 

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Business Essay Sample

Running a Family Business

The family business is the oldest and most common unit of economic organization. In the XXI century people are increasingly opting to start family businesses as their fundamental source of wealth creation and employment.

Not surprisingly, in a family business, family members are predominantly involved in the business processes and their participation has various positive and negative effects.

Positive effects

The sense of belonging, experienced by all employees, is a central feature of a family business that makes it unique among the various forms of economic organization. Family businesses are enormously important considering they account for a significant number of businesses, and can make up 80% and even up to 95%, depending on the country (Walsh, 2011). Family-owned companies have a major impact on creating employment. Another significant feature is that the owners of family businesses devote considerable time and energy into their enterprise’s development. Seldom do they lack motivation to see their enterprises succeed. In an era of regular financial crises, family businesses more easily weather the storms due to the stronger bonds of family. The willingness of family members to make sacrifices for the sake of business, the mutual trust typical among the business partners, and a generally more positive attitude and enthusiasm towards clientele are other advantages.

Negative effects

The family business has its disadvantages. For example, being committed to certain traditions may hinder the implementation of innovative ideas and business developments. Typically they’re smaller in scale, which can reduce the ability to acquire capital and to be open to new leadership. Furthermore, the stresses of the business may emotionally impact the personal lives of the family and vice versa – this can also negatively impact the work (Chrisman et al., 2005). The leader of the family business has a very important role because in addition to the management of business activities, it might be taking into account future generations and succession rights, which can lead to conflict – although on the flip side, this might encourage a longer term perspective. 

Family businesses are a combination of advantages and disadvantages – that depend heavily on the unique characteristics of the families involved. Family members are typically loyal and dedicated while on the other side the work life and the family life must be in balance, which can pose certain problems and have negative impacts on business operations. 

Chrisman, J. J., Chua, J. H. & Steier, L. P. (2005). Sources and consequences of distinctive familiness: an introduction. Entrepreneurship Theory and Practice 29 (3): 237-247 .

Walsh, G. (2011). Family Business Succession: Managing the all-important family component .  Retrieved  from https://www.kpmg.com/ca/en/services/kpmg-enterprise/centre-for-family-business/documents/3468_succession.pdf

Rules for Writing an Essay on Business

• Select a business topic. Before you begin, decide on the topic of your essay. It should be interesting and relevant. Choose a topic that incites your curiosity and that you would like to study in more detail.
• Plan a business essay structure. Organize your thoughts and work plan. Divide the essay into an introduction, body, and conclusion. The body may consist of several paragraphs, each of which supports and develops the main idea(s).
• Give reasons for your point of view. A business essay is not just a statement of facts, but also your own opinion and argumentation. Support your points of view using facts, examples, business citations, and research.
• Revise and edit. When writing an essay, pay attention to grammar and punctuation to avoid submitting a text with mistakes.
• Use relevant business vocabulary and stylistic techniques to make your text’s meaning clear and, where relevant, persuasive. Be precise and clear in expressing your thoughts.
• Maintain logical coherence. Your business essay should have a logical structure, with each paragraph continuing and developing the previous idea. Use transition words and phrases to ensure a smooth transition from one idea to another.

Get help from EssayShark.com and a writer will follow all of your requirements, academic standards, and general rules for formatting an essay. After completing a paper, your writer will check it to eliminate any errors and shortcoming. Moreover, the writer will follow a clear essay structure to make the text easy to read. 

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Family Business Essay

The family business is an enterprise or project owned and operated by family members, fathers, mothers, and children where the company’s vision and ideologies are the same. Nepotism is common in such establishments. There are so many family enterprises or businesses that have successfully grown into famous empires. A significant percentage of people believe and support that running a company or business with family members is the most effective option. Nepotism affects business ideology, organisational value, and productivity negatively and positively. There should be restrictions when including family members in a business. The paper aims to closely examine the concept of nepotism in business, highlighting its drawbacks and benefits.

Nepotism refers to an ideology or practice in a business where an individual appoints or hires family members to occupy different positions for which people from outside may be higher or better qualified. Adam Bellow believes people are hard-wired to care for friends and family members (Daniel, 2020). He argues that appointing family members in a business is associated with negative and positive impacts. He based his argument on the scenarios of ancient Chinese clans, Renaissance Papal Lineages, and American families like Bushes, Kennedys, and Gores. If practised haphazardly, nepotism can lead to embarrassment to all parties involved in the business, including customers or recipients. If done professionally, nepotism can benefit an organisation and society (Daniel, 2020).

Nepotism enhances family bonding and relationships by creating distinct business values compared to other organisations, companies or enterprises. In his argument, Adam Bellow is sceptical concerning the long-term impact of nepotism since it can lead to societal embarrassment. He tries to show that nepotism ignores or leads to the seclusion of better and highly qualified employees in society. Handling nepotism in a positive and professional way can save the family business from perishing due to harmful and negative stereotypical ideologies of including family members in a business (Daniel, 2020). A great percentage of business people are sceptical and distrustful in expressing their views and opinions about the impacts of nepotism in an enterprise or business.

The integration of the aspect of nepotism in a business has led to multiple questions. If the owner of the organisation or business appoints his son to be the new manager, how should the employees from outside handle him? It raises even more questions when he is younger than them and occupies a lower position in the company. Most American companies and businesses have conflicting views and policies about nepotism since they have unique anti-nepotism beliefs and values.

American companies do not allow nepotism in their operations. They believe that different roles or positions should be occupied and accomplished by professionally qualified, highly competent and skilled employees, regardless of being outsiders (Daniel, 2020). Fundamentally, nepotism conflicts with the American values of merit and egalitarianism. Nepotism can be harmful if it is not handled well. For example, Paul Wolfowitz lost his job at World Bank after attempting to secure a promotional deal for Shaha Reza, his partner.

The African and Asian community values family members and tolerates nepotism. One of the things that have made them successful in running family businesses is the presence of unique cultural practices and values that outsiders cannot imitate or tolerate. In the United Kingdom, organisations prefer royal family members to outsiders. Based on this, Dr Gillian Evans argues that nepotism can benefit a business and enhance the creation of a safety net (Daniel, 2020).

However, the practice is frustrating for community members who cannot access job opportunities because of nepotism, regardless of their high professional qualifications, skills and competence. Nepotism should be integrated carefully to achieve and maintain exceptional business value. The primary goal of a business is to achieve high profitability and productivity, which necessitates growth and sustenance. To achieve this, it is important for business leaders to hire professional, competent and skilled employees who are not necessarily family members.

Pros of Running a Family Business

Running a family business is associated with various advantages. First, it acts as a greater incentive for the family members to remain committed and work harder to ensure the success and growth of their business (Sheila, 2018). A family business is associated with tax advantages, especially when under-aged children need to be hired or included in the business. Involving family members in a business is important because one understands their personalities and work ethics. It reduces the risk of appointing or hiring a person who might not meet the job expectations due to personality differences and the inability to apply work ethics.

A family business acts as a shorter learning curve or bonus to the owner since the family members are highly likely to be familiar with and understand the business. It reduces the time and money spent on training the outside employees about the business and its requirements, policies and protocols (Sheila, 2018). Working with family members makes it easy to adjust work schedules. For example, they can stand in for each other, especially when faced with an emergency or unforeseen situation.

A family business enhances the creation of a more relaxed and conducive environment with minimal conflicts. The absence of major family issues and conflicts makes it easy to run the business since no time is needed to learn about each other. Since they understand the likes, dislikes, preferences and interests of each other, the family members are likely to operate a business smoothly without major issues, disagreements or conflicts. Dealing with family members saves money and time since there is no need for advertising job opportunities and scheduling interviews in an effort to find the best person who fits a certain job position (Sheila, 2018). Additionally, running a business with family members ensures easy decision-making with minimal or no office politics. The family members are likely to follow and consider business traditions and protocols for decision-making compared to employees who have been hired from outside.

Drawbacks of Running a Family Business

Involving family members in a business can lead to distractions and petty disagreements, which are likely to pull one’s attention and focus from the business goals. The distractions may make it hard for someone to concentrate on important details concerning the business, including the customers’ expectations and the best ways of improving business productivity and the quality of services rendered to the customers. This may, in turn, negatively affect the services offered to customers leading to dissatisfaction and reduced business productivity and profitability, thus leading to failure.

Working closely with family members may lead to difficulties differentiating between home and work. The person will likely take work home or take family issues and problems to work. For instance, disagreement between wife and husband can interfere with the business, thus driving customers away. Additionally, family members like the mother may have difficulties balancing work and family duties, thus affecting her performance and productivity in the business (Amato et al., 2020).

Dealing with family members makes the business more vulnerable. For instance, if the family experiences a breakdown or divorce, a great part of the business will likely be affected. The business may be closed down when handling the divorce proceedings, thus affecting the flow and sustainability of the business in the competitive market. Running a firm with family may lead to the breakage of protocols and rules that have been established to ensure a seamless flow of business operations and the successful attainment of desired goals as far as productivity and profitability are concerned. For example, a son may break business rules since he knows he is less likely to be fired.

A family business may lead to hard feelings among other staff members, especially when a son or daughter breaks the rules and no actions are taken. The other employees may build resentment. When dealing with family members in a business, it may be hard to handle raises and promotions. Such things should be clearly documented and allocated as deserved. Business leaders must handle infractions fairly to avoid hard feelings and resentment in the firm since it may demotivate the employees or cause conflicts (Sheila, 2018).

The inclusion of family members hinders diversity since the CEO feels he must hire his son or daughter even though they do not have the knowledge, skills and competence needed for the job position or role. Hiring family members lacking the necessary skills may cost the business money and time. Working with less competent and skilled family members may ruin the business due to poor products, mismanagement and failure to meet and satisfy customers’ needs.

Allowing a father, mother and children to be part of the business can lead to many chiefs. If the business fails to define and establish work boundaries clearly, there is a likelihood of a disaster. Everyone in the business may want to feel like a boss and push for their opinions to be heard and considered. It leads to confusion since the staff members may need help understanding who to listen to and follow. If everyone becomes the boss, there is a possibility of differing opinions, difficulties in decision-making and bumps in the implementation of business projects, operations or activities.

A business that family members run may have challenges when taking negative feedback and making adjustments. Giving corrections and criticism to a son or daughter will likely trigger strife, friction and conflict in the workplace. Feedback on negative or poor job performance is likely to be taken negatively and cause friction in the family unit. It may affect family relationships since all the members have close and strong emotional ties. To avoid hurting a family member, one is likely to give dishonest feedback about performance. Lack of transparency or honesty in a business may lead to errors, poor performance and reduced productivity.

Owning and running a family firm is associated with stale ideas (Amato et al., 2020). For example, the son is less likely to object to his father’s ideas concerning a certain project or task. As a result, family members are likely to support ideas of each other even though they are stale and not evidence-based. Succession planning is a key issue in a family business. Having multiple owners may lead to difficulties in deciding who will run if one has to step down. The leader is obliged to identify the best person who is skilled enough to ensure the growth of the business. This is a daunting decision.

I agree with the statement on having more restrictions on running or operating a business with all family members, like, father, mother and children. It is apparent that businesses that are owned and run by families are delicate and sensitive since one has to balance the rewards and risks. If one is starting to begin a business or firm with his family members, he should think carefully before leaping into it. He cannot assume that the enterprise will be successful since families are different.

Problems and issues are common in most families. The person should find effective ways of overcoming family issues to ensure they do not interfere with the business flow and operations. To ensure business safety, it is important to scout out the terrain in physical and emotional aspects for a better and clear understanding of issues to expect when dealing with family members in the organisation.

Hiring staff members from outside enhances workplace skill mix and knowledge transfer. It brings together professionals and experts with advanced and diverse skills and expertise. This enhances creativity and innovation in the business, thus improving quality of services offered to customers. Including employees from outside shows value to community members and allows them to apply their knowledge and skills. It enhances a culture of equity and inclusivity in the community. Combining family members and employees from the outside ensures the establishment of clear boundaries and minimises family-related conflicts and issues that are likely to interfere with the business.

In conclusion, a family business includes the father, mother, children and relatives. The family-managed business enhances the achievement, maintenance and elevation of a sense of stability in the organisational structure, culture and leadership. Nepotism is a practice whereby an individual includes only his family members and relatives in a business regardless of their education level, skills, and competence. A family-owned firm is various advantages and disadvantages. The benefits of including family members are the possibility of hard work, tax advantages, shorter learning curve, creation of a relaxed environment, cost-effectiveness, adjustment of work schedules, and minimised conflicts.

On the other hand, business-managed enterprises and firms have various drawbacks, including more vulnerability, more distractions, inability to balance and separate between home and work, breakage of rules, limited diversity and creativity, lack of skills, hard feelings and resentment, stale ideas, and negative perception of feedback. Generally, it is important for business organisations, firms, and enterprises to consider hiring employees from outside to enhance creativity, skill mix, knowledge transfer, effective decision-making, improved performance and productivity.

Amato, S., Basco, R., Backman, M., & Lattanzi, N. (2020). Family-managed firms and local export spillovers: Evidence from Spanish manufacturing firms.  European Planning Studies, 29(3),  468-492. https://doi.org/10.1080/09654313.2020.1743238

Daniel P. (2020).  Keeping it in the family . Sage Publishing.

Sheila C., (2018). The advantages of running a family business.  Journal of Management ,  1,  3-4.

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What It Takes To Run a Family Business An inherited business is not only about looking back at what is valued from a family point of view, but also about looking forward at what motivates families to continue to build on the legacy

By Shrabona Ghosh Aug 22, 2024

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

When it comes to family businesses, legacy is the connective tissue which binds the core purpose of the business – the values and achievements– accumulated across generations. The next gen of any legacy family business can make-or-break the heirloom. To ensure a smooth functioning of the business, it is imperative to have a transformative induction plan in advance coupled with role clarity, accountability trackers, quarterly dialogues, industry leader mentorship and external work experience.

"To truly nurture the next generation, we must plant the seeds of knowledge and passion early, allowing them to blossom into capable stewards of the legacy. They should be imparted the necessary skills to successfully integrate into the family business ecosystem. The current generation must be clear about the roles the next gen will play, whether they will be owner-managers, owner-strategists, or owner-investors, setting clear expectations and empowering them at the right time. Resources and capabilities should be gradually scaled-up in the system accordingly to support the next gen," said Dr. Tatwamasi Dixit, chairman at Family Business Research International Centre (FABRIC)

An inherited business is not only about looking back at what is valued from a family point of view, but also about looking forward at what motivates families to continue to build on that value through future generations. "There is no cookie cutter framework, as the process is unique to every family business and depends on family and business composition. However, if the next gen has different passion, it's equally important to support their individual paths while allowing them to continue as owner-investors in the family enterprise," the chairman said, explaining about the family value chain.

The next gen: not an easy inheritance

While sustaining the family legacy is a weighty obligation for younger generations, it is important for them to understand their responsibilities. The pragmatic nature of family business and its long-term prosperity are closely connected with the emotive underpinnings of the family's legacy. Decoding this emotional aspect, Dixit shared, "Often post the succession, there are multiple challenges surrounding the decision. The founders are often plagued by thoughts of losing identity & control, loss of power and centrality. Furthermore, the next gen also faces doubts of stakeholders as most have high trust and reputation on the founder and the previous generation. It is difficult for the next generation to enjoy that kind of trust from the beginning of the induction, it takes time."

Proving one's worth in a family business can be incredibly challenging due to the complex blend of personal and professional relationships. Unlike non-family enterprises, family businesses often have established expectations, legacy pressures and potential inherent biases. The younger generation usually finds it challenging to be heard and be accepted. "Deciding early on whether to join the family business can significantly aid in building a solid foundation. It is not a prerequisite for success, but it certainly helps. Gaining 2-3 years of external corporate experience is highly recommended, as it provides valuable insights and fresh perspectives. A deep understanding of the business's history, values, and strategic goals is vital in preparation. Building strong relationships and mutual professional respect with family members and employees fosters trust and collaboration," said Varun Puri, MD, Green Power International.

In an earlier conversation with Entrepreneur India, Amudha Ranganathan, director e-comm and special projects CavinKare India, had explained the scenarios involved in proving one's merit, "From a very young age, our parenting was full of values, ethics, insights into how business was approached, and guidance on what actions to take. CK Ranganathan, my father, laid the foundation for CavinKare and established a rigorous benchmark for us, this provided a strong grounding for us during the period. When you're a young child, you might not grasp the context, however, once you enter the workforce, periodically, you reflect on the guidance. We were able to distinctly resonate with how it relates to us, why it was said then, and how we should apply it in our business practices."

Effective communication is key to maintaining operational continuity and clarity, and one should not avoid difficult conversations with family members. Family business success requires professional competence, emotional intelligence, and a genuine commitment to the enterprise's long-term vision. Balancing these elements can help one discover their niche and contribute significantly to the business's growth and sustainability. To distinguish oneself, respecting the traditions set by senior generations while introducing innovative ideas is crucial.

Although there may be various points of views among different generations as to how to manage the business, there is one thing that remains constant: the desire to maintain and grow the business and the family's legacy. However, different working styles of the current generation and that of the previous one often come in conflict. "Sometimes the purpose of the previous gen and the next gen is not aligned. Lack of competence and a flamboyant attitude of the next gen with a consumer mindset instead of a contributor mindset, often leads to contention. With regards to values and purpose, they need to be on the same page to ensure growth."

Building trust amongst different shareholders

In Indian family businesses, building trust with these stakeholder groups: Family, customers, public (which includes financial partners/banks) and employees remains a cornerstone for thriving in the Indian family business landscape. Family firms are now readily accepting professionals on board, increased participation and involvement is encouraged across all levels.

Whenever, it comes to the connection between ownership and management, the coexistence should be harmonious, the management needs to embrace the pioneering and innovative spirit that the founding generation embodied. "The only way harmony will continue is if both parties are in an inclusive journey, it's called a parallel planning process (PPP). If there's a collaboration, there won't be conflict of interest. Promoters should not treat the professionals as servitor, they have to treat them as partners," Dixit said. The parallel planning process requires a commitment to have on-going conversations, to document decisions and to measure the alignment of goals.

According to PwC's 11th family Business Survey, dealing with conflict has never been easy for family businesses. It's part of an ongoing struggle many have with establishing strong family governance structures. The conflict resolution mechanisms to deal with family disputes was at 13 per cent globally and 19 per cent in India. Only 65 per cent of global and 63 per cent Indian family business leaders say that they have formal governance structures in place. This includes shareholder agreements, family constitutions and protocols, and even wills.

Explaining the potential benefit of an independent board director, adviser, or the council, Dixit said, "They bring in an unbiased view on table and provide a safe space. They can mediate and facilitate conversations and help in resolving deadlocks. It is important to have an independent person, who can either be inducted as a director or as an adviser or a facilitator. It's basically a trusted adviser whom everybody is ready to believe."

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Family values and success of the family business.

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Rear view of multi-generation family relaxing in row on retaining wall against clear sky

The success of a family-owned business is defined by relationships – relationships with employees, vendors, customers and family. Subjectively, families attribute their relationships on their family values. estate planner’s documents should reflect these family values.  Frequently asked is the question of whether family values influence the success of a family business, and if so how? 

Now comes new research from the Family Firm Institute on how core values shape family business behavior, which is outlined in the February 17, 2021 FFI Practitioner by Guido Corbetta and Carlo Salvato ,both at Bocconi University in Milan, Italy. Here is a quick summary of their findings.

The unique behavior of successful family businesses has five dimensions, namely:

·        Family control and influence,

·        Identification of family members with the business,

·        Strong binding social ties both in and out of the business,

·        Intense emotional attachments by the family to the business, and

·        Constant renewal of family bonds across multi-generational succession.

How to Make Your Retirement Investments Reflect Your Values

These values, and their associated behaviors, make a family business successful when the result is an openness to change (grounded on independence and freedom of choice), self-enhancement of owner-managers (through achievements and power), self-transcendence (by prioritizing the interest of others over yourself) and conservation ( through tradition, conformity and security). All of these are necessary for success, but any one outbalancing the others can lead to failure.

What this means for family-owned businesses is that, being self-aware of their shared values, and their behaviors, enables them to take advantage of the strengths and avoid the weaknesses of a family business. For example, when describing their values on the family business web site, there is a risk that the public will perceive this as mere window dressing. When, in fact, a better description of how shared values, and the resulting behaviors, based on these shared relationships is a shared advantage to the business, customers and vendors.  

For estate planners and other advisors, being aware of these value-based behaviors, and making the family aware of them also, means that they can better help balance the desire of the family members towards openness to change, self-enhancement, self-transcendence, and conservation. Inherently, estate planners lean more towards conservation, by protecting assets from mismanagement and taxes, which may stifle change and self enhancement.

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Home / Essay Samples / Business / Family Business

Family Business Essay Examples

The dynamics behind successful family businesses.

The landscape of business is diverse and dynamic, hosting a myriad of enterprises that vary in structure, goals, and operations. Among these, family businesses stand out as unique entities that combine blood ties with entrepreneurial aspirations. The question of what makes a family business successful...

Running a Family Business in Ireland: Challenges and Benefits

Throughout my assignment for Family Business, I will address the different challenges and problems as well as the benefits of running a family business in Ireland. I will be relating each one back to Irish family run business that I have chosen. Each challenge and...

Why Entrepreneurship is Better than Family Business

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Pros and Cons of Running a Family Business in Mexico

Family businesses in Mexico are mostly companies, which are very small or do not have the success expected, due to the large amount of competition that exists in Mexico; Mexican companies that thrive, have planning from the first generation which are referred to the grandparents...

Analysis of the Strategy of Tijn Van Elderen – the CEO of Brabantian Company

Brabantia is an exclusive Dutch organization which manufactures house appliances, for example, squander receptacles, clothing racks, nourishment stockpiling compartments and different items. The organization was established in 1919 in Aalst, Netherlands, under the name van Elderen and Co, the company having some expertise in sheet...

Specificity of Family Entrepreneurship

Family business is considered a very important area of small business. Namely, we find it in different forms (in terms of its size, field of activity, number and structure of employees, legal organizational forms, etc.). Family business is a term that collectively describes the involvement...

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