Five Common Advantages & Challenges Every Family-Owned Business Faces
Family-owned businesses are largely seen as trustworthy, important parts of society. But for all their benefits, there are plenty of challenges that family-owned businesses have to face too. Below, we explore some of the advantages and challenges of a family-owned business.
The advantages of a family-owned business
Families usually share the same core beliefs. This is helpful in the business as it ensures that mostly everyone has aligned goals. As a result, family businesses are often more coherent and go about their work with added pride and purpose.
Strong family bonds can help unite the business. Even during difficult moments for the company, a sense of loyalty will help everyone persevere and attempt to push through.
Family businesses know that they aren’t under pressure to sell up or turn a quick profit. This stability can help the business prioritise long-term growth over short-term revenue which usually benefits the health of the company.
Family members might well take decreased pay in order to help the business. This means that it can save money on hiring an external board of directors that would come at a much higher cost.
The challenges they face
On the flipside, the work/family balance can be difficult for a family-owned business. It can be difficult to switch off as a family if you’re running a business together. For instance, any professional arguments might spill over into family time.
Loyalty v ambition
The expectations of a family business can be difficult too. For some young people, they might relish entering the family business. But for others, it can feel like their future is strictly set out for them. One way to avoid this problem is to give younger family members full autonomy over their future.
Family-owned businesses need careful and meticulous succession planning. You don’t want to end up in a situation where multiple different parties are competing to take over the business. By making your intentions clear when it comes to succession, you can avoid any confusion.
Businesses have a moral duty to protect their employees. But if a hazard leads to an accident, then fines and compensation could put a family-owned business under huge financial pressure. However, by investing in tradesman insurance you can ensure that your business is covered in the worst-case scenario.
A family-owned business can be a source of immense pride and value. Usually, they’re a coherent, reliable operation that can be trusted. Although there can be difficulties with succession planning and work/life balance, they still represent the backbone of the economy.