Family Business: How it Works, Pros and Cons

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Family businesses make up a large part of the country's enterprises. From small businesses to large corporations, we have examples of companies in which the family takes care of management, which is often passed down from generation to generation.

Even though they are common, family businesses are full of challenges and specific peculiarities that other types of businesses do not have. Keep reading and understand how family businesses work, their pros and cons.

How family businesses work
As the name suggests, family businesses are those in which the owners or employees are part of the same family. The assets and income of the employees are linked to those of the company, so the business needs to incorporate the needs of the family, such as succession, profit sharing and other aspects of this type of company.

It is worth remembering that, to be a family business, it is not south korea phone number lead necessary to have relatives in charge of the company. The business can be managed by a person outside the family, as long as there are family members on the board of directors or shareholders, it will continue to be a family business.

Family businesses can have different characteristics and operating methods. Learn about the types of management and organizational culture of family businesses here.

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Pros and cons
Some of the strengths of opening a family business include trust among members and the possibility of forming a determined team dedicated to the business. The culture and values are already consolidated within the family and should be passed on to other employees who come from outside.

The single, centralized command allows for quick reactions in emergency situations. Another benefit is that investments can be obtained from savings or inheritances from family members. All investments in new training and employee development will be returned within the company itself.

undertake as a family
The disadvantages include the difficulty of separating family issues from business issues, power struggles in relation to business management, and lack of financial control when salaries and benefits are not defined. Separating personal and corporate accounts is the first step to avoiding financial conflicts.

When different generations are working together, there may also be conflicts of ideas and interests, or even authoritarianism on the part of the founder or main manager. Therefore, it is essential that interests are aligned and that everyone focuses on the interests of the organization as a whole. Check out tips on how to resolve conflicts in family businesses here.

Succession in family businesses
This is one of the most difficult points and one that generates the most conflicts in family businesses. In order for the company's baton to be passed on smoothly and safely, both for family members and for the development and future of the company, this decision must be made in advance and with planning.

The successor must be appointed in the presence of the main manager and with the participation and approval of all those involved. Dialogue is essential so that existing problems or possible conflicts can be resolved in the best possible way.

family business management
Furthermore, investment should be made in preparing the successor for the position. This should be done through professional training courses so that he or she can acquire the skills necessary to manage the company. However, one should also not forget the day-to-day experience of the business, getting to know the employees, the needs of the business, its products and services, its customers and other important aspects for management.

Starting a business as a family may not be easy. But having someone you trust along the way may be what you need to take the first steps on this journey. Dialogue, trust and agreements are tools that can make life together, both in the company and as a family, easier.