10 Advantages and Disadvantages of Family Businesses

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

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

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

Advantages of the Family Business

Long-term planning for generations

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

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

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

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

Positioning in the local market through trust in the family

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

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

Family values

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

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

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

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

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

Resilience in times of crisis

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

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

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

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

Trust in the members of the work team

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

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

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

Disadvantages of the family business

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

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

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

Emotional conflicts

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

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

Lack of commitment from family members

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

Adding non-working family members to the payroll

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

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

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

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

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

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

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

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