starting a family business

Most people would advise you to get a job on your own and work at it for a couple of years before joining the family business. I completely agree with this and think it’s a beneficial way of acquiring a few skills that the family business won’t get you.

  1. Working outside the family firm will improve your business judgement and will help you bring some new ideas for the family firm.
  2. Interview. The nerve wracking interview.. If you end up in the family business you might interview and hire employees. If you have gone through the process yourself you’d be more qualified at interviewing a future employee.
  3. Working outside the family business can boost your confidence and self esteem. This will also help you stop questioning wether you really want to join the family business.
  4. Etc…

I’m a sophomore student and have the option of working and joining the family firm. I believe that I want to join the family firm and take over. However, I can’t know for sure unless I try other fields of work. I’m considering working somewhere else to gain some experience and then join the family firm. I still have time to decide this. Don’t get me wrong, starting off directly at the family firm is great too, but why not learn a few things outside.

A Japanese phrase that I have been adopting is Genchi Genbutsu– “go and see for yourself”.

You can’t know unless you try.

How do you professionalize a family business?

Your question implies that a family-run business is not professional, maybe by its very nature.  Family members tend to be too close, emotionally, to each other that when working closely together their “true personalities” can come through under stressful circumstances.  There also may be a tendency to take advantage of family members and unilaterally do things without consulting the other players.  (These things can happen in a non-family-run business, too, if the upper management has an authoritarian, top-down style of management —  which I personally couldn’t work for.)

Have respect for each other

To be “professional” I think you’re implying that a sense of civility, decorum, and respect for coworkers and customers should be evident in the day-to-day running of the business.  Yes?   To me this implies that there has to be a certain emotional distance.  Don’t take things personally, don’t raise your voice when “discussing” things, don’t attack when things aren’t done quite perfectly.  In short, have respect for each other.

Work environment

The rest of it, like a clean and updated work environment, appropriate technology to run the business,  and clean/pressed uniforms (these just pop into my head as things that make a business appear professional to me), are good, but maybe not necessary, additions to make a business look professional.  How the members treat each other — and treat the customer — makes the atmosphere far more professional.

And that’s just my personal perspective.  Generally, if I have a choice between shopping at a big box store or a smaller local retailer I’ll tend to give my business to the “little guy,”  because I want to foster smaller businesses in my community.

What are the key challenges for family businesses?

In addition to the normal business issues, the big killer for a family business is nepotism and ultimately, transfer of control.

A family member gets hired.

Let’s assume the family member is not qualified for the position and is expected to grow into it. When they make mistakes, unlike with other employees, there are no consequences.

The family member knows they aren’t going to get fired so they don’t work as hard and everyone around them emulates their work ethic. “Joe doesn’t put in the hours to get the job done right and on time, why should I?”

Let’s assume the family member is to ultimately inherit the company and they are instead hard working and very conscientious. They will have a different viewpoint from the head of the company who will always view them as not as knowledgeable as them. The head will only give up control when the family member is ready, and that day will never come.

I was told that most family businesses do not survive to the second generation.

I’ve seen a 3rd generation (probably 4th by now) business thrive.

Family members can have summer jobs while in school but they are supervised by a non-family member who is expected to cut them zero slack. They can and do get fired faster than a normal employee.

Family members after their education is done have to wait to work for the family business for a minimum of five years. They have to get a job somewhere else and be successful at it before they can apply for a job in the family business. They have to be the best candidate for the job as determined by non-family members.

All family members get a portion of profits from the business. So it is in their best interest to only hire the best person for the job.

Many family members work in the business because it’s what they grew up with, it’s their passion, and they feel they can grow it better than anyone else.

Ultimately, all family members put the company way above any specific family member retaining their job. And all the other non-family members know they have a shot at advancing because in a tie, they’ll get the job over an equally qualified family member.

What are the pros and cons of working for a family-run business?

Advantages of family businesses

  • Common values – you and your family are likely to share the same ethos and beliefs on how things should be done. This will give you an extra sense of purpose and pride – and a competitive edge for your business.
  • Strong commitment – building a lasting family enterprise means you’re more likely to put in the extra hours and effort needed to make it a success. Your family is more likely to understand that you need to take a more flexible approach to your working hours.
  • Loyalty – strong personal bonds mean you and family members are likely to stick together in hard times and show the determination needed for business success.
  • Stability – knowing you’re building for future generations encourages the long-term thinking needed for growth and success – though it can also produce a potentially damaging inability to react to change.
  • Decreased costs – family members may be more willing to make financial sacrifices for the sake of the business. For example, accepting lower pay than they would get elsewhere to help the business in the longer term, or deferring wages during a cashflow crisis. You may also find you don’t need employers’ liability insurance if you only employ close family members.
  • Family members could cover you in case of emergency or absence for nothing.

Disadvantages of family businesses

  • Lack of skills or experience – some family businesses will appoint family members into roles that they do not have the skills or training for. This can have a negative effect on the success of the business and lead to a stressful working environment. And it will be very difficult to hire someone else to his job.
  • Family conflict – conflict can arise in any business, but it’s important to consider that disputes within a family business can become personal as the staff are working with the people closest to them. Bad feelings and resentment could destabilise the business’ operations and put your family relations at risk.
  • Favouritism – can you be objective when promoting staff and only promote the best person for the job whether they are a relative or not? It is important to make business decisions for business reasons, rather than personal ones. This can sometimes be difficult if family members are involved.
  • Succession planning – many family business owners may find it difficult to decide who will be in charge of the business if they were to step down. The leader must determine objectively who can best take the business forward and aim to reduce the potential for future conflict – this can be a daunting decision.
  • Emotional and social considerations Will be a challenge, where you should separate them from business strategies.
  • Second generation conflicts and politics, mostly it is better to move the business to the next level and to be on the stock market, where each share holder is free to sell his shares whenever he want.

In general, most successful businesses are basically family businesses

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